360 ONE WAM: Q2-25 Earnings Call Highlights
Strong Q2-25 performance. Strong AUM growth, healthy flows, successful client acquisition, & strategic expansion initiatives. Positioned to capitalize on opportunities in wealth & asset management
iiflwealth.com | NSE: 360ONE
1. Key Takeaways
1.1 TLDR
Overall, 360 ONE WAM delivered a strong Q2 FY25 performance, characterized by robust AUM growth, healthy net flows, successful client acquisition, and strategic expansion initiatives.
The company's management remains optimistic about the future and is well-positioned to capitalize on the growth opportunities in the Indian wealth and asset management space.
1.2 Operational Highlights:
Strong Financial Performance:
Highest ever quarterly profit after tax (PAT) of ₹247 crores, a 33.4% year-on-year increase.
Total AUM: ₹2,42,619 crores (up 41% YoY)
Net Flows: ₹9,786 crores
Revenue: ₹589 crores (up 38% YoY)
ROE: 31.2%
Robust Net Flows: Net flows were strong at ₹9,786 crores for Q2 FY25, driven by both wealth management and asset management segments, driven by new client acquisitions and strong performance in existing funds.
New Client Acquisition: The wealth management business successfully onboarded over 160 families with AUM exceeding ₹10 crores and over 70 families exceeding ₹50 crores.
Expansion into New Segments: The company is witnessing early positive responses from its new initiatives targeting the HNI segment and global business.
Dividend Policy Revision: The dividend payout ratio will be revised downwards to 25-40% to facilitate reinvestment in the lending and alternates businesses.
Focus on Technology: Investments in technology are aimed at improving internal efficiency and enhancing client-facing platforms
1.3 Key Themes:
Wealth Management:
Client base increased to over 7,500 clients.
Onboarded over 160 families with over ₹10 crores AUM and over 70 families with ₹50+ crores AUM.
Strong net flows of ₹8,400 crores in the quarter.
Asset Management:
Strong flows in both listed equity and alternatives.
Secured a $350 million institutional mandate from a marquee global investor.
Successfully raised ₹5,000 crores in commitments for private equity and private credit funds.
Flagship focused equity fund crossed ₹8,500 crores in AUM.
Buoyant Market Outlook: The management remains optimistic about the long-term growth prospects of the Indian wealth and asset management industry, citing strong economic momentum, encouraging macro indicators, and sustained domestic flows.
Focus on Platform and Product Innovation: 360 ONE WAM's continued focus on platform enhancements, product innovation, and client-centricity is a key driver of its success in attracting new clients and driving growth.
“We strongly believe that our continued focus on our platform, product innovation, execution and most importantly client interests positions both our wealth and asset management business uniquely for these opportunities.”
Strong Alternative Investment Performance: The company has successfully raised significant commitments for its private equity and private credit funds. The planned distributions from earlier funds are nearing completion, contributing to robust gross flows.
“We are also witnessing rising levels of interest and engagement with global institutions for private market ideas in India and again with strong alternative investment capabilities in this sphere we are well placed to benefit from such opportunities.”
Talent Acquisition and Retention: The company has made significant investments in expanding its team, particularly in wealth management. The recent exit of a co-founder will be managed through robust succession planning.
“I think from a continuation and a succession perspective typically speaking historically impact of a relationship manager change over a period of 3 to 5 years is typically impacted the book anywhere between 1 to 4%.”
Focus on Operational Efficiency: While the company expects cost-to-income ratio to remain in the late 40s in the short term, optimisation efforts and revenue growth will drive the ratio down to 46-47% in the long run.
Adaptability to Market Cycles: The company’s diversified business model, spanning listed and unlisted assets, credit, real estate, and infrastructure, provides resilience in volatile market conditions.
“Our market share improves dramatically in the in a flattish market actually a market share…because clients typically uh clients, relationship managers, everybody kind of typically comes back to basics.”
1.4 Things to Watch
Full-year flow guidance: While the current guidance remains at ₹25,000-30,000 crores, it could potentially be revised upwards based on the strong Q2 performance.
Other income: The sequential decline in other income is primarily due to mark-to-market adjustments on investments in alternate funds.
Broker code change impact: Broker code changes contributed to around 25% of the total flows in Q2, with a significant portion attributable to mutual funds.
Steady-state TBR: The company expects steady-state transactional-based revenue to be in the range of ₹100-125 crores per quarter.
360 ONE WAM Q2 FY25 Earnings Call FAQ
What were the key highlights of 360 ONE WAM's Q2 FY25 earnings?
Strong AUM Growth: Total AUM increased to ₹2,42,619 crores, up 41% year-on-year, driven by strong net flows of ₹9,786 crores.
Robust Net Flows: Wealth management saw net flows of ₹8,400 crores and asset management saw ₹1,400 crores in net flows. Notably, the first half of FY25 already achieved 80% of FY24's total flows.
Successful Client Onboarding: Over 160 families with over ₹10 crores AUM and over 70 families with ₹50+ crores AUM were onboarded.
Alternative Investments: ₹5,000 crores in commitments were raised through private equity and private credit funds.
New Initiatives: The HNI (high-net-worth individual) segment and global business initiatives are showing positive initial responses.
Profitability: Reported highest ever quarterly PAT (profit after tax) at ₹247 crores, up 33.4% year-on-year.
What is the outlook for the wealth and asset management industry in India?
Despite recent growth and potential valuation concerns, India's wealth and asset management industry has a strong long-term growth story. Factors supporting this view include:
Low Penetration: Financial investment penetration in India is significantly lower compared to developed countries, indicating substantial room for growth.
Rising Wealth: India's robust economic momentum and encouraging macro indicators point to continued wealth creation.
Shifting Demographics: Wealth creation is expanding beyond traditional pockets, creating new opportunities.
How is 360 ONE WAM positioned to capitalize on this growth?
360 ONE WAM believes its focus on these key areas positions it well for future success:
Platform Strength: Investments in technology and digital platforms are enhancing both internal efficiency and client-facing services.
Product Innovation: A strong product pipeline, including diverse asset classes (listed, unlisted, credit, real estate, and infrastructure), caters to evolving client needs.
Execution Excellence: A focus on consistent and effective execution across all business segments is driving results.
Client-Centric Approach: Prioritizing client interests and building strong relationships are at the core of their strategy.
What is the impact of the recent departure of co-founder Anirudha Taparia?
While the departure of a senior member is never ideal, 360 ONE WAM emphasizes:
Multiple Client Touchpoints: Their structure ensures each client has multiple points of contact, mitigating the impact of any single departure.
Strong Succession Planning: A deep bench of experienced bankers ensures smooth transitions and minimal disruption to client relationships.
Limited Business Impact: The anticipated impact on wealth management revenues is expected to be less than 2-3%.
What is the company's strategy for transaction-based revenue (TBR)?
Stable Outlook: 360 ONE WAM believes that ₹100-125 crores per quarter is a reasonable estimate for steady-state TBR.
Diversification: TBR is generated from various sources including listed equity, fixed income brokerage, and special situations like the NSE block deal.
Market Dynamics: While recent quarters have seen elevated TBR due to heightened market activity, the company expects some normalization in the future.
How is the company's lending book expected to grow?
AUM-Linked Growth: The lending book is expected to grow at around 2-2.5% of the wealth management AUM.
Target Size: With a wealth management AUM approaching ₹4 lakh crores, the company sees a sustainable lending book size of ₹8,000-10,000 crores.
What is the outlook for the company's dividend policy?
Shifting Focus: The company will be relatively more conservative in its dividend payout, moving from a range of 65-80% to around 25-40% of profits.
Capital Allocation: This shift reflects the need for reinvestment in the lending and alternatives businesses, while profits from the wealth management and listed asset management businesses will largely be distributed as dividends.
What is the strategy for growth in the HNI (high-net-worth individuals) segment?
Phased Approach: The initial phase focuses on leveraging the existing ultra-high-net-worth client network and onboarding a select group of relationship managers.
Measured Ramp-Up: Over the next six months, the company will refine its offerings and assess its performance before significantly scaling up recruitment efforts.
Future Expansion: Beginning in April 2025, the company plans to expand more aggressively by hiring 150-200 relationship managers and broadening its geographic reach.
Source: Link to Earning Call Transcripts
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