360 ONE - Well Placed To Gain Out Of The Emerging Trends: Motilal Oswal

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Motilal Oswal Report

Over the past decade, 360 ONE WAM Ltd. (erstwhile IIFL Wealth and Asset Management Ltd.) has evolved into one of the best wealth management franchises in India. It has become one of the largest alternative asset managers with unique product offerings.

With 360 ONE Plus, the company aims to revolutionise the landscape of wealth management in India, prioritising recurring revenue over the traditional transaction-based model.

In order to grow annual recurring revenue assets under management, 360 ONE 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,

4. chase new money and

5. scale up AMC.

We believe 360 ONE is well placed to gain out of the emerging trends as it-

1. enhances its reach in the lower tier cities (earlier focus was on metros and top 10 cities),

2. diversifies into the Rs 50-250 million net-worth customer base versus Rs 250 million plus earlier, and

3. invests into technology to strengthen its phygital approach.

We expect 360 ONE to register an AUM compound annual growth rate of 13% over FY23-25 and the cost to-income ratio to decline to 44% in FY25E from 45.9% in FY23, translating into an earnings CAGR of 12%.

With a healthy dividend payout of 80% and return on equity of 26% by FY25, we find valuations reasonable at price/earning of 15 times FY25E earnings per share.

We maintain our 'Buy' with a one-year price target of Rs 620.

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