The quarter-on-quarter performance showed continued momentum, with net profit advancing 10.82% from ₹284.67 crores in Q1 FY26. Revenue from operations climbed to ₹1,114.95 crores, representing a substantial 22.33% sequential increase and a 28.87% year-on-year surge. This acceleration in top-line growth reflects the company's expanding client base and increasing assets under management in a buoyant wealth management environment.
Yet beneath the surface, margin dynamics reveal a more complex picture. Whilst operating margin excluding other income improved to 64.03% from 62.09% in the previous quarter, the company's profit after tax margin contracted to 28.30% from 31.23% quarter-on-quarter, suggesting rising cost pressures and interest expenses that are eroding profitability at the bottom line.
Financial Performance: Navigating Growth Amidst Rising Costs
The quarterly financial trajectory demonstrates 360 ONE's ability to generate consistent revenue growth, but also highlights the challenges of maintaining profitability in a competitive landscape. Net sales in Q2 FY26 reached ₹1,114.95 crores, marking the highest quarterly revenue in the company's recent history. This represents a 28.87% year-on-year increase from ₹865.15 crores in Q2 FY25, and a robust 22.33% sequential growth from Q1 FY26's ₹911.46 crores.
| Metric | Q2 FY26 | Q1 FY26 | Q2 FY25 | QoQ Change | YoY Change |
|---|---|---|---|---|---|
| Net Sales | ₹1,114.95 Cr | ₹911.46 Cr | ₹865.15 Cr | +22.33% | +28.87% |
| Operating Profit (Excl OI) | ₹713.92 Cr | ₹565.89 Cr | ₹540.95 Cr | +26.15% | +31.98% |
| Net Profit | ₹315.48 Cr | ₹284.67 Cr | ₹245.49 Cr | +10.82% | +28.51% |
| Operating Margin (Excl OI) | 64.03% | 62.09% | 62.53% | +1.94% | +1.50% |
| PAT Margin | 28.30% | 31.23% | 28.38% | -2.93% | -0.08% |
Operating profit excluding other income surged to ₹713.92 crores, the highest level recorded across the past twelve quarters, demonstrating strong operational leverage. However, the company's reliance on debt financing is becoming increasingly apparent. Interest expenses climbed to ₹253.89 crores in Q2 FY26, up 11.11% quarter-on-quarter and 9.31% year-on-year, reflecting the company's debt-to-equity ratio of 2.05 and total debt burden of ₹11,095 crores.
Employee costs rose to ₹272.47 crores from ₹246.45 crores in the previous quarter, a 10.56% sequential increase, as the company continues to invest in talent acquisition and retention to support its growth ambitions. This upward trajectory in personnel expenses, whilst necessary for scaling operations, is compressing net margins despite robust top-line expansion.
Key Financial Insight
Whilst 360 ONE delivered impressive 28.87% year-on-year revenue growth in Q2 FY26, the company's profit after tax margin contracted to 28.30% from 31.23% in the previous quarter. This margin compression stems from rising interest expenses (up 11.11% QoQ) and employee costs (up 10.56% QoQ), highlighting the challenge of maintaining profitability amidst aggressive expansion.
Operational Dynamics: Margin Volatility Raises Questions
The company's operating margin excluding other income of 64.03% in Q2 FY26 represents a sequential improvement from 62.09% in Q1 FY26, but remains below the exceptional 67.92% achieved in Q2 FY25. This volatility in operating margins across quarters suggests that 360 ONE's cost structure may not be fully optimised for consistent profitability, particularly as the business scales.
Return on equity (ROE), a critical measure of capital efficiency for wealth management firms, stands at 15.25% for the latest quarter. Whilst this represents reasonable profitability, it falls short of the company's five-year average ROE of 18.36% and significantly trails peers in the NBFC sector. Higher ROE indicates better capital efficiency and profitability, and 360 ONE's current level suggests there is room for improvement in generating returns from shareholder capital.
The company's balance sheet reveals substantial leverage, with a debt-to-equity ratio of 2.05 and net debt of ₹2,395 crores. For a wealth management platform, this level of financial leverage is noteworthy, as the business model typically requires less capital intensity compared to traditional lending NBFCs. The elevated debt burden necessitates careful monitoring of interest coverage and cash flow generation to ensure financial stability.
⚠ Margin Pressure Alert
Despite strong revenue growth, 360 ONE's PAT margin has declined from 31.23% in Q1 FY26 to 28.30% in Q2 FY26, a contraction of 293 basis points quarter-on-quarter. The combination of rising interest expenses, increasing employee costs, and elevated debt levels (debt-to-equity ratio of 2.05) poses a risk to sustained margin expansion. Investors should closely monitor whether the company can improve operating leverage in coming quarters.
Quarterly Trend Analysis: Consistent Growth with Margin Volatility
Examining the twelve-quarter trend provides valuable context for understanding 360 ONE's financial evolution. Net sales have demonstrated consistent upward momentum, growing from ₹518.38 crores in December 2022 to ₹1,114.95 crores in September 2025, representing a compounded quarterly growth trajectory. However, the path has not been entirely smooth, with occasional sequential declines such as the 12.17% drop in December 2024.
| Quarter | Net Sales (₹ Cr) | Net Profit (₹ Cr) | Operating Margin (Excl OI) | PAT Margin |
|---|---|---|---|---|
| Sep'25 | 1,114.95 | 315.48 | 64.03% | 28.30% |
| Jun'25 | 911.46 | 284.67 | 62.09% | 31.23% |
| Mar'25 | 820.77 | 249.60 | 56.19% | 30.41% |
| Dec'24 | 759.83 | 276.47 | 55.76% | 36.39% |
| Sep'24 | 865.15 | 245.49 | 62.53% | 28.38% |
| Jun'24 | 849.34 | 243.74 | 67.92% | 28.70% |
| Mar'24 | 791.17 | 242.61 | 36.18% | 30.66% |
| Dec'23 | 629.78 | 192.11 | 59.53% | 30.50% |
The margin profile reveals significant quarterly fluctuations. Operating margin excluding other income has ranged from a low of 36.18% in March 2024 to a high of 67.92% in June 2024, before settling at 64.03% in the latest quarter. This volatility raises questions about the predictability of earnings and the sustainability of current margin levels as the company continues to scale operations.
Peer Comparison: Valuation Premium Demands Justification
Positioning 360 ONE within the broader NBFC landscape reveals a company trading at a significant premium to operational metrics. With a price-to-earnings ratio of 44.84x and a price-to-book value multiple of 6.70x, the stock commands valuation multiples that require exceptional growth and profitability to justify.
| Company | P/E (TTM) | P/BV | ROE (%) | Div Yield (%) |
|---|---|---|---|---|
| 360 ONE | 44.84 | 6.70 | 15.25 | 0.50 |
| Multi Commodity Exchange | 72.93 | 25.25 | 29.72 | 0.32 |
| CRISIL | 47.66 | 13.52 | 28.37 | 1.22 |
| Nippon Life India | 41.97 | 13.45 | 30.53 | 2.01 |
Compared to peers, 360 ONE's ROE of 15.25% lags significantly behind Multi Commodity Exchange (29.72%), CRISIL (28.37%), and Nippon Life India (30.53%). This lower capital efficiency, combined with a premium P/E multiple, suggests that the market is pricing in substantial future growth that has yet to materialise in current profitability metrics. The company's dividend yield of 0.50% also trails the sector, offering limited income appeal to investors seeking regular cash distributions.
The price-to-book ratio of 6.70x, whilst lower than some peers, still represents a substantial premium to book value that typically requires sustained high-teens or low-twenties ROE to justify. With current ROE at 15.25%, there exists a valuation-profitability gap that investors should carefully consider.
Valuation Analysis: Premium Pricing Amid Growth Expectations
360 ONE's current valuation metrics paint a picture of a stock priced for perfection. Trading at ₹1,160.95 with a market capitalisation of ₹47,478 crores, the company commands a P/E ratio of 44.84x, significantly above the broader market average. The EV/EBITDA multiple of 28.65x and EV/Sales ratio of 17.00x further underscore the premium valuation assigned by the market.
The PEG ratio of 20.15x is particularly concerning, suggesting that the stock's valuation far exceeds its growth rate. A PEG ratio above 2.0 typically indicates overvaluation relative to growth prospects, and 360 ONE's reading of 20.15x raises serious questions about whether current price levels adequately reflect the company's earnings growth trajectory.
Valuation Dashboard
P/E Ratio (TTM): 44.84x | P/BV Ratio: 6.70x | Dividend Yield: 0.50% | Overall Assessment: VERY EXPENSIVE
The stock has been classified as "Very Expensive" since June 22, 2023, when it traded at ₹452.80. Despite the premium valuation persisting for over two years, the company's profitability metrics have not demonstrated sufficient improvement to justify the elevated multiples.
The 52-week trading range of ₹766.05 to ₹1,317.25 shows the stock currently positioned 11.87% below its peak and 51.55% above its trough. This mid-range positioning, combined with the "Very Expensive" valuation grade, suggests limited upside potential unless the company can deliver substantial earnings surprises or margin expansion in coming quarters.
Shareholding Pattern: Institutional Confidence Remains Strong
The shareholding structure reveals robust institutional participation, with foreign institutional investors (FIIs) holding 68.54% of equity as of June 2025, up from 67.22% in March 2025. This 1.76 percentage point increase in FII holdings signals continued confidence from global investors in the company's long-term prospects, despite near-term valuation concerns.
| Category | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|
| Promoter | 6.27% | 14.20% | 14.76% | -7.93% |
| FII | 68.54% | 67.22% | 66.15% | +1.32% |
| Mutual Funds | 6.00% | 6.41% | 7.31% | -0.41% |
| Insurance | 0.85% | 1.04% | 1.07% | -0.19% |
| Other DII | 1.03% | 1.05% | 1.35% | -0.02% |
However, the dramatic decline in promoter holding from 14.20% in March 2025 to 6.27% in June 2025 warrants attention. This 7.93 percentage point reduction represents a significant dilution of promoter stake, which could signal either strategic fundraising requirements or concerns about near-term business prospects. Investors should seek clarity on the reasons behind this substantial promoter stake reduction.
Mutual fund holdings decreased marginally from 6.41% to 6.00%, whilst insurance company holdings also declined from 1.04% to 0.85%. The reduction in domestic institutional participation, contrasted with increasing foreign institutional interest, suggests divergent views on the stock's prospects between Indian and international investors.
Stock Performance: Stellar Long-Term Returns, Tepid Recent Momentum
360 ONE's stock performance presents a tale of two timelines. Over the long term, the stock has delivered exceptional returns, with a five-year gain of 394.63% significantly outpacing the Sensex's 109.97% return during the same period. This translates to a remarkable alpha of 284.66 percentage points, demonstrating the wealth creation potential the stock has offered patient, long-term investors.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +6.01% | +1.76% | +4.25% |
| 1 Month | +5.17% | +1.52% | +3.65% |
| 3 Months | -3.74% | +2.06% | -5.80% |
| 6 Months | +21.46% | +6.87% | +14.59% |
| YTD | -7.41% | +7.44% | -14.85% |
| 1 Year | +5.10% | +3.64% | +1.46% |
| 3 Years | +146.87% | +43.73% | +103.14% |
| 5 Years | +394.63% | +109.97% | +284.66% |
However, recent performance has been decidedly lacklustre. The stock has declined 7.41% year-to-date, underperforming the Sensex by 14.85 percentage points. This negative alpha in 2025 suggests that the market has become increasingly sceptical about the company's ability to sustain its historical growth trajectory at current valuation levels.
The three-month return of -3.74% further underscores the near-term headwinds, with the stock underperforming the broader market by 5.80 percentage points during this period. Technical indicators show the stock currently in a "Mildly Bullish" trend as of October 9, 2025, but this follows a period of volatility with frequent trend changes between bullish and bearish classifications.
"Whilst 360 ONE has delivered exceptional long-term returns of 394.63% over five years, the stock's year-to-date decline of 7.41% and premium valuation metrics suggest that future gains may prove more elusive without substantial margin expansion and profitability improvements."
Investment Thesis: Quality Company, Challenging Entry Point
360 ONE WAM operates in an attractive segment of India's financial services landscape, catering to high-net-worth individuals and ultra-high-net-worth clients seeking sophisticated wealth management solutions. The company's quality grade of "GOOD" reflects its solid operational foundation, consistent revenue growth, and strong institutional backing. However, the current investment proposition is complicated by valuation concerns and margin pressures that limit near-term upside potential.
The company's financial trend is classified as "POSITIVE," with quarterly results showing record-high profit levels and sustained revenue momentum. Yet this positive trend must be weighed against the "VERY EXPENSIVE" valuation grade and a Mojo score of 64 out of 100, which places the stock in "HOLD" territory rather than buy recommendation status.
✓ Key Strengths
- Strong Revenue Growth: Net sales surged 28.87% YoY to ₹1,114.95 crores in Q2 FY26, demonstrating robust business momentum and market share gains in wealth management
- High Operating Margins: Operating margin excluding other income of 64.03% reflects efficient business model with strong pricing power
- Institutional Confidence: FII holdings increased to 68.54%, up 1.32 percentage points QoQ, signalling continued global investor interest
- Consistent Profitability: Net profit of ₹315.48 crores represents eighth consecutive quarter of profitability growth, with 28.51% YoY increase
- Market Leadership: Ranked #33 out of 660 NBFC companies by market capitalisation, establishing strong competitive position
- Long-Term Track Record: Five-year returns of 394.63% demonstrate exceptional wealth creation for patient investors
- Quality Grade: "GOOD" quality assessment reflects solid operational fundamentals and governance standards
⚠ Key Concerns
- Margin Compression: PAT margin declined from 31.23% to 28.30% QoQ despite revenue growth, indicating rising cost pressures
- Elevated Valuation: P/E of 44.84x and PEG ratio of 20.15x suggest stock is priced for perfection with limited margin for disappointment
- Below-Average ROE: Return on equity of 15.25% trails peer average and five-year historical average of 18.36%, signalling declining capital efficiency
- High Debt Burden: Debt-to-equity ratio of 2.05 and total debt of ₹11,095 crores raise concerns about financial leverage and interest coverage
- Promoter Stake Reduction: Dramatic decline in promoter holding from 14.20% to 6.27% in one quarter warrants explanation and monitoring
- YTD Underperformance: Stock down 7.41% year-to-date versus Sensex gain of 7.44%, with negative alpha of 14.85 percentage points
- Rising Interest Costs: Interest expenses increased 11.11% QoQ to ₹253.89 crores, eroding profitability and limiting margin expansion potential
Outlook: What to Watch in Coming Quarters
The investment case for 360 ONE hinges on the company's ability to sustain revenue growth whilst improving operational efficiency and capital productivity. Several key factors will determine whether the stock can justify its premium valuation and deliver attractive returns from current levels.
Positive Catalysts
- Margin Expansion: Sustained improvement in PAT margins above 30% through operating leverage and cost optimisation
- ROE Improvement: Return on equity climbing back towards 18-20% range through better capital allocation
- AUM Growth: Continued expansion of assets under management driving sustainable revenue growth
- Debt Reduction: Deleveraging efforts to bring debt-to-equity ratio below 1.5x, improving financial flexibility
Red Flags to Monitor
- Further Margin Decline: PAT margins falling below 25% would signal serious profitability challenges
- Continued Promoter Dilution: Additional reduction in promoter stake without clear strategic rationale
- Rising Interest Burden: Interest coverage deteriorating below comfortable levels amid debt servicing pressures
- Valuation Disconnect: Inability to grow earnings at rates sufficient to justify premium multiples
For existing shareholders, the key decision point revolves around whether the company's long-term growth prospects and market positioning justify holding through a period of valuation consolidation. For prospective investors, the current price levels offer limited margin of safety, suggesting patience for a more attractive entry point may be warranted.
The Verdict: Quality Business, Stretched Valuation
Score: 64/100
For Fresh Investors: Not recommended for fresh investment at current levels. The combination of premium valuation (P/E 44.84x, PEG 20.15x), declining ROE (15.25% vs 18.36% historical average), and margin compression (PAT margin down from 31.23% to 28.30%) suggests limited upside potential. Wait for a meaningful correction or substantial improvement in profitability metrics before initiating positions.
For Existing Holders: Continue to hold with close monitoring of margin trends and debt levels. The strong revenue growth, high institutional ownership, and positive financial trend support maintaining positions for long-term investors. However, set a stop-loss if ROE falls below 14% or debt-to-equity exceeds 2.5x, as these would signal deteriorating fundamentals.
Fair Value Estimate: ₹950-1,000 (14-18% downside from current levels), based on normalised P/E of 35-38x and sustainable earnings growth of 18-20%.
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
