Buy 360ONE WAM; target of Rs 770: Motilal Oswal

Motilal Oswal's research report on 360ONE WAM

360ONE’s total revenue grew 6% YoY to INR4.4b in 3QFY24, in line with our estimate, mainly driven by a 9% QoQ jump in ARR income (in line) to INR3.4b. However, TBR income fell 13% QoQ to INR1b. Total opex rose 24% YoY to ~INR2.3b, which was 6% higher than our estimate. Increased employee costs (6% above estimate) led to higher opex in 3QFY24.  Employee costs jumped 30% YoY. Total ESOP cost came in at INR120m (up 109% YoY and up 33% QoQ). During the quarter, 360ONE’s cost-toincome ratio increased ~760bp YoY to 52.5% (vs. our estimate of 48%). PBT for the quarter was broadly in line at ~INR2.4b. PAT grew 13% YoY to INR1.9b in 3QFY24. For 9MFY24, Revenue/PAT grew 9%/12% YoY to INR12.7b/INR5.7b. Total AUM rose 32% YoY to INR4.54t, led by a continued focus on scaling up the ARR assets. ARR AUM was up 33% YoY to INR2.21t.

Outlook

The board has approved an interim dividend of INR4 per share. We have revised down our EPS estimates by 3.4%/1% for FY25/FY26 to factor in higher cost on account of additional headcount (including senior level hires) in the ultra HNI segment and cost relating to new business initiatives (mid-market segment and global platform). We retain our BUY rating on the stock with a one-year TP of INR770 (based on 25x Mar’26E EPS).