360 One Can Rally 20% Despite Market Weakness, Analysts Say Post B&K Acquisition

Jefferies has maintained its 'buy' rating on 360 One WAM Ltd. while trimming the target price on the stock to Rs 1,270 from Rs 1,350. Despite the target price cut, its upside on the stock stands at 26% with the brokerage positive on the company following its acquisition of B&K Securities. Motilal Oswal echoed the same view as both brokerages maintained over 20% upside for the counter.

At the analysts' meet, 360 One's management reiterated synergies from its recently announced acquisition of an SMID-focused institutional broker, which complements its wealth offering to ultra high net-worth individuals.

The scale-up of equity broking and equity capital market offer are cited by the brokerages as lucrative opportunities, given existing promoter relationships. The target price trim is broadly to account for mark to market hit, lower total business return and moderation in flows, according to Jefferies.

Management had earlier announced the acquisition of B&K Securities, a full-service mid-cap brokerage, in a Rs 1,880 crore stock and cash deal.

This will complement 360 One'S UHNI wealth business in two areas, larger equity broking opportunity, especially in the SMID segment. The advantage will also impact execution capabilities through investment banking.

The trim according to Jefferies is to also account for weaker capital markets. Given the recent correction in equity markets, the brokerage trimmed estimates to factor in negative MTM impact, lower TBR activity, and moderation in net flows across both wealth and asset mgmt.

The brokerage noted an opportunity in scaling up the company's equity broking with the existing client base. The management believes it has not scaled up to the full extent on the equity broking side.

Annual broking income earned is in the Rs 60–70 crore range over the last 3–4 years. The acquisition is expected to aid in scaling up this offering, with management expecting to clock up to 2–3 times jump in revenues over the next 3–5 years.

Currently these clients would potentially be trading with other brokers as 360 One had gaps in offering the right research product along with the wide coverage, which B&K is expected to fill, according to the brokerage. Build-up of the IB engine will take some time, and growth is expected to be gradual.

The valuation multiple seems elevated, but synergies may be meaningful, according to Jefferies. While B&K is profitable and growing, the transaction values it at 18 times the financial year 2025 price over earnings, which appears rich compared to some listed institutional brokers.

In addition to the Rs 1,880 crore payout, B&K's leadership and team members will receive ESOP shares and cash payouts totalling up to Rs 500 crore over the next 4–6 years. Hence, even as the transaction is EPS-accretive in the near term, the cumulative deal value elevates the demand for synergies, according to the brokerage.

Motial Oswal has retained the 'buy' rating on the stock with a target price of Rs 1,250, implying a 24% upside. The brokerage mirrors the view that the B&K acquisition is a strategic fit, enhancing business through equity advisory for existing clients.

This will further benefit the corporate advisory, and leverage 360 One’s relationships to scale IB operations. The brokerage estimates the B&K business to grow at a 15–25% revenue CAGR over 3–5 years.

This is expected to be driven by existing and new customers. In the core business, according to Motilal Oswal, 360 One is poised to gain market share in current market corrections, with clients holding 10–20% cash for equity deployment.

Further, the HNI business should scale in 12–18 months, according to Motilal Oswal, while the global business is set to grow near term.

360 One stock rose as much as 4.02% during the day to Rs 1,050 apiece on the NSE. It was trading 3.42% higher at Rs 1,043.15 apiece, compared to an 0.2% advance in the benchmark Nifty 50 as of 11:33 a.m.

It has risen 35.45% in the last 12 months. The total traded volume so far in the day stood at 2.3 times its 30-day average. The relative strength index was at 54.4.

Ten out of the 13 analysts tracking the company have a 'buy' rating on the stock, two recommend a 'hold' and one suggest a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 1,196.2, implying an upside of 14.3%.