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JM Financial

  • Writer: Dhruv Meisheri
    Dhruv Meisheri
  • Jun 15
  • 2 min read

Business Segments

  1. Investment banking

    1. Advises M&A, private equity syndication, managing capital market transactions.

    2. Highly ranked in the IPO and #1 in QIP sector with around 40% market share in each (in terms of funds raised). Frequently participating in some of the largest deals

  2. Mortgage Lending

    1. Provides finance against commercial and residential real estate to corporations and non-corporate clients. Includes housing finance.

  3. Asset & Wealth Management

    1. Investment advisory and distribution services (equity brokerage, retail wealth management). Also manages mutual fund assets through multiple schemes.

    2. Wealth AUM: 1.1 lakh cr + Asset AUM: 13,400 cr

  4. Alternative & Distressed Credit

    1. Provides securitization and reconstruction of financial assets and management of alternative credit funds

  5. Other (rental income, income from QIP issue)


Growth Drivers

  • Increased stake in JM Credit Solutions to almost full, as well as increasing stake in ARC. Allows for better cash control

  • Wealth and Asset Management: This segment has scaled extremely well and we can see the AUM increase significantly over the next few years. They will also develop large-cap schemes to help grow AUM

    • Management aspiration is to scale these businesses by 2x in the coming years. As scale benefits accrue, RoEs can start inching up from current levels of 9% to 18%+ levels eventually

  • Sharpened capital allocation

    • In the past, JM had significant capital stuck in real estate with uncertain recoveries.

    • Now, they've rationalized the real estate loan book and have a capital redeployment strategy for their cash on hand


Management Guidance

  • Plans to become a "partner of choice" for family-owned businesses

  • Board recommendation of INR 2.7 dividend. Guidance to potentially double dividends in next three years

  • Planning to reach INR 10,000 cr private credit book in next three years. Yield guidance of 12-13%, with 1-2% additional fee from syndication

  • Planning to grow affordable home loans AUM by 30% CAGR (5,000 cr by FY27 and 10,000 cr by FY30). ROE guided to improve from 8.5% to ~12% by FY28

  • Shift to asset-light, off-balance sheet model

    • Reduced wholesale loan book by ~50% with minimal balance sheet impact this year

    • Pivoting towards origination-to-syndication and fee-based models in private credit and private equity, reducing reliance on lending


Valuation


I struggled to value the business, but you can refer to GreenEdge's sum-of-the-parts model here:


Risks

  • Past corporate governance issues (Promotor + SEBI)

  • Misallocation of capital going forward


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