Buy 360ONE WAM; target of Rs 850: Motilal Oswal

Motilal Oswal's research report on 360ONE WAM

360 ONE WAM (360ONE) is well placed to maintain its leadership position in a favorable macro environment, where in inter-generational wealth transfer is expected to gather momentum and the adoption of organized wealth management increases in the lower tier cities. With a wide product portfolio, 360ONE is capable of countering the cyclicality as it is seeing strong traction in credit products and advisory mandates (360ONE Plus inflows of INR238b in 9MFY24 vs. INR110b in FY23). In order to grow ARR AUM, 360ONE is focusing on a five-point strategy: 1) increase wallet share among existing clients, 2) expand into new geographies, 3) increase share in inter-generation wealth transfer, and 4) scale up AMC. 360ONE has a combination of both ESOPs and incentive for employees, which is largely as a function of three parameters: 1) time spent by the employee (~15-20% weightage), 2) respective business plan achievement and performance (~50-60% weightage), and 3) performance of the firm (~10-20% weightage).

Outlook

We expect 360ONE to register an ARR AUM CAGR of 23% during FY24-26. This, along with an improvement in CIR, will translate into an earnings CAGR of 20%. Also, the company will report a healthy RoE of 31% by FY26 and maintain a healthy dividend payout of 80%. We reiterate our BUY rating on the stock with a one-year price target of INR850 at 27x FY26E EPS.