Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 360 One Wam Ltd (NSE:360ONE, Financial) reported a significant increase in ARR AUM to INR227,000 crore, up 36.3% year-over-year.
- The company onboarded over 400 new clients with 10 plus crore of ARR AUM in FY24, indicating strong client acquisition.
- The Board approved an interim dividend of INR3.5 per share for FY25, reflecting confidence in future earnings.
- The company reported its highest-ever PAT on both a quarterly and full-year basis, with Q4 PAT at INR241 crore and full-year PAT at INR802 crore.
- Employee retention remains industry-leading with voluntary attrition at only 5.4% for FY24, indicating strong employee satisfaction and stability.
Negative Points
- Corporate costs increased by 33% year-over-year to INR956 crore in FY24, driven by large deals and investments in new business segments.
- Employee costs rose by 36.3% year-over-year due to additional headcount, including senior-level hires, impacting overall profitability.
- The overall cost to income ratio stood at 48.7%, which the company expects to gradually reduce over the next few quarters.
- The company experienced higher transaction and brokerage income, which may not be sustainable in the long term.
- The lending book saw a dip in net interest margin to 5.16% from 5.7% in the previous quarter, indicating potential challenges in maintaining profitability in this segment.
Q & A Highlights
Q: The non-recurring revenue was unusually high in Q4. What were the major reasons driving that?
A: We had three or four significant transactions, including a large block placement of National Stock Exchange shares, which added around INR100 crore in incremental transaction and brokerage revenue.
Q: AMC witnessed some outflows this quarter. Can you provide more details?
A: The active flows were better, with around INR5,850 crore for the current quarter. Some assets moved from advisory to distribution clients, but they are not lost from the system.
Q: What is the guidance for the next two to three years in terms of business growth and profitability?
A: We expect to add around 12% to 15% of our ARR active net flows annually. We aim to grow our active ARR AUM by 20% to 25%, including a normalized mark-to-market of around 8% to 9%.
Q: There was a significant jump in variable pay and admin costs this quarter. Can you explain the reasons?
A: The increase in variable pay is partly due to higher transaction revenue and one-off sign-on bonuses for new joiners. Admin costs rose due to incremental spending on legal, marketing, and technology.
Q: How do you see the mix of new flows in terms of advisory, discretionary, and distribution?
A: We aim for a balanced mix, with a higher bias towards discretionary and alternate investments, followed by public markets and advisory. This mix will help maintain our retention yields.
Q: Can you provide an update on the status of NSE shares on your books?
A: We do not hold NSE shares on our books. Our exposure to NSE is through investments in our funds, and any shares held are sold as soon as possible.
Q: What is the capacity to service new clients, and how do you plan to utilize the new families onboarded?
A: We have around 120 senior bankers and 100 relationship managers, capable of managing 5,500 to 6,000 active families. The tenure of the client and RM significantly impacts the quantum of business, with volumes increasing 2.7 to 2.8 times over three to five years.
Q: What are the expectations for the mid-market and global business segments over the next three to five years?
A: For the mid-market business, we aim to reach INR10,000 crore initially, then set sights on INR25,000 crore and INR50,000 crore. For the global business, we target $1 billion in AUM by the end of the financial year.
Q: How do you see the managed account and distribution yields changing?
A: We do not expect significant changes in yields. The mix of assets, including alternates, PMS, and mutual funds, will determine the overall yield, but it should remain stable.
Q: What is the guidance for active ARR AUM flows for FY25?
A: We expect 10% to 15% of the opening stock of INR200,000 crore to come in as net flows, amounting to INR20,000 crore to INR30,000 crore, plus the mark-to-market on the INR200,000 crore.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
