Global brokerage firm Citi Research has initiated coverage on 360 ONE Wam, formerly known as IIFL Wealth Management, with a 'Buy' rating and a target price of ₹600 per share. This target price indicates a potential upside of 25% from the stock's latest closing price of ₹479.75.
The brokerage's optimistic outlook stems from the company's dominant position, diverse product offerings, robust client retention, manageable cost structure, and growth potential through geographical expansion.
360 ONE Wam is one of the largest wealth-management companies in India, with net assets under management (AUM) of ₹2.4 billion as of FY2023. The company primarily focuses on serving high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs). As of FY2023, the company served approximately 6,800 relevant families, as stated in the research note by the brokerage.
The brokerage stated that 360 ONE Wam holds a niche and dominant position in India's rapidly growing wealth management market for high-net-worth individuals and ultra-high-net-worth individuals, which is characterised by less professional management.
The brokerage also highlighted the company's wide range of products and services, including discretionary/non-discretionary portfolio management, advisory services, private equity funds, listed equities, long-short strategies, real estate funds, and various tie-ups with manufacturers for alternative investment funds (AIF), portfolio management services (PMS), and mutual fund distribution.
In addition to that, 360 ONE Wam provides supplementary services such as real estate planning and lending, it added.
For wealth managers, client stickiness is crucial, and 360 ONE Wam demonstrates strong client retention by consistently delivering robust performance across most schemes, the brokerage noted.
The company's wide and diversified product bouquet, coupled with its strong relationship manager (RM) retention, according to the brokerage, has contributed to maintaining high client stickiness. Over 72% of RMs as of FY2023 have been associated with the company for more than five years, and RM attrition to large-scale competitors has been negligible, it highlighted.
Furthermore, the company's cost-to-income ratio of 46% for FY2023 is significantly lower than global averages, indicating a manageable cost trajectory. While people-intensive businesses like wealth management face limitations in leveraging economies of scale, 360 ONE Wam's cost efficiency remains better than select domestic peers despite its lower scale, the brokerage emphasised.
The brokerage also pointed out the company's prominent position in the professionally managed financial wealth segment of HNIs and UHNIs in India, with a market share of approximately 9–10%. The company aims to deepen its penetration into smaller markets and expand its presence from the current 24–25 cities to approximately 40 cities.
This expansion strategy aligns with the increasing concentration of financial assets in smaller markets across India in recent years. By targeting these markets, the company aims to capitalise on emerging opportunities and leverage its strong foothold as a boutique player, as per the brokerage.
05 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
