Motilal Oswal has started coverage on 360 ONE WAM with a ₹1,400 price target, highlighting a 17% revenue increase. The firm's focus on recurring income, which grew 28%, helped offset a dip in transactional revenue. Investors are monitoring how the company balances its operational efficiency and potential costs from new leadership hiring in the competitive wealth management space.
Motilal Oswal Financial Services has officially started covering 360 ONE WAM, setting a price target of ₹1,400. This update follows the company's recent quarterly performance, where it reported operating revenue of ₹9 billion, a 17% increase compared to the same period last year. The revenue result was slightly better than what many market analysts had expected.
A significant part of the company's success is linked to its shift toward more stable, long-term income. This is called Annual Recurring Revenue (ARR)—money earned from managing assets over time rather than one-time fees. This segment grew by 28% to reach ₹7.1 billion. This growth was crucial in helping the company navigate a 9% decline in its transactional business revenue, which tends to be more unpredictable as it depends on market trading activity.
While revenue trends were strong, the company's Profit After Tax (PAT) came in at ₹3 billion, falling about 8% short of some analyst estimates. This miss was primarily caused by 'negative other income,' which refers to losses or adjustments from financial activities outside the company's core business, such as short-term investments. Because the core wealth management operations remained resilient, the brokerage actually increased its earnings estimates for the company for the next two fiscal years.
Efficiency is a key metric for wealth managers. 360 ONE WAM managed to improve its cost-to-income ratio—the amount spent to generate a rupee of income—by 0.6% compared to last year, bringing it to 51.6%. Analysts tracking the stock expect this ratio could drop to between 46% and 47% over the next year or two as the company becomes more productive. However, investors should note that the company plans to hire more staff and expand its leadership team. While this is done to support growth, it could create some short-term fluctuations in profits due to higher salary and overhead costs.
To determine the target price, the brokerage used a valuation method that separates the business into different parts. It assigned a higher value multiple to the stable recurring income business and a lower multiple to the more volatile transactional business. Moving forward, shareholders will likely watch how these hiring plans impact operating margins and whether the company can maintain its pace of asset gathering in a competitive market environment.