On Thursday, Kotak reaffirmed its Add (2) rating and INR850.00 price target for shares of 360 ONE WAM Ltd (360ONE:IN). The endorsement follows the company's announcement of its intention to acquire ET Money, a move that is expected to bring approximately 0.9 million revenue-generating clients and Rs280 billion in assets under management (AUM) to 360 ONE. Despite the anticipated minimal revenue contribution of less than 2% from the acquisition, Kotak sees the deal as an opportunity for 360 ONE to establish a presence in the burgeoning investment platform market.
The analyst from Kotak highlighted that the acquisition of ET Money aligns with 360 ONE's strategy to expand its product offerings, as well as leverage its in-house broking and lending services. The integration is seen as a long-term play, with the business projected to become profitable within two to three years. However, there is an expectation of some earnings dilution for 360 ONE during the first few years following the acquisition.
The analyst's maintained price target of INR850 indicates confidence in the company's potential for growth despite the initial earnings dilution. The acquisition is poised to offer 360 ONE access to a rapidly expanding sector and a sizable new client base, which could lead to significant synergies in the future.
The Add (2) rating suggests that Kotak sees the stock as a good investment with potential for appreciation. Investors and market watchers will be keeping a close eye on how the acquisition of ET Money impacts 360 ONE's performance and whether the predicted synergies and profitability timeline materialize as expected.
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