JM Financial - seems to be getting the attention now.
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JM Concall
- Digant Haria question at the very beginning
- JM financials recurring revenue monologue was amazing.
- ARC recoveries good too.
Very +ve concall and heartening to see the IPO market updates : pipeline of 45 IPO transactions aggregating to 1 lakh crore
- closed 10 capital market transactions during the quarter, demonstrating a “disproportionate market share”
Bajaj investment might be helpful in long run with - firstly to establish a valuation for the home loan business
they can sell portfolios to Bajaj housing just like the past from its affordable housing fin.
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Any view on these regulatory issues for which JM Financial was penalized by RBI and SEBI. Looks like there have been questionable practices. Below cases are not very old.
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I think this issue solve,last qtr and fy year result and comentry of promotors achived nicely .
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JM Financial Q2 FY26 Results
The Positive Highlights
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Investment Banking Remains Strong: The Corporate Advisory and Capital Markets division continued to perform well, with its PAT growing 41% YOY.
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Large Future Pipeline: A key positive for the company is its filed IPO pipeline, which has grown to ₹1,20,000 crores. On the earnings call, management stated they typically earn about 0.8% to 1% of the issue size on these deals.
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Fee Income at Record High: The company’s fee and commission income reached its highest ever quarterly level at ₹341 crores, a 20% increase year-over-year. This aligns with the company’s “asset-light” strategy.
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Affordable Home Loans Growing: The affordable housing segment’s AUM grew 28% YoY, crossing the ₹3,000 crore mark. The profit for this division doubled to ₹13 crores. This follows a small stake sale in Q1 to Bajaj Allianz, which set a valuation for the business at approximately ₹3,100 crores.
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Shareholder Payouts: The company declared an interim dividend of ₹1.5 per share, following through on its earlier promise to increase payouts as the business requires less capital.
The Challenges and Investment Costs
- “Growth Engine” is a Short-Term Cost: The main challenge is that the segments management is investing in for future growth are currently a drag on profits.
- Heavy Spending: The company is in an “investment phase,” hiring aggressively. The number of Wealth Management Relationship Managers (RMs) doubled year-over-year (from 101 to 204), and the total sales staff grew 43% (to 1,015).
- Resulting Losses: These new costs are impacting the bottom line immediately.
- Wealth Management: Profit (PBT) declined to ₹37 crores (from ₹45 cr last year). Management noted this was partly due to an industry-wide slowdown in broking volumes.
- Asset Management: The division posted a loss of ₹10 crores.
- Mutual Fund SIPs: The SIP book for the mutual fund business fell from its peak to ₹115 cr/month. Management attributed this to “volatility” from “do-it-yourself” digital clients.
Strategy: Where the Money is Going
On the call, management explained the current spending is part of a clear strategy to grow its Asset Management business by launching new Alternative Investment Funds (AIFs).
- A Pre-IPO fund has been filed and is awaiting regulatory approval.
- A Real Estate Credit fund has been approved and is now in “full fundraising mode.”
- A new Private Equity (PE) fund is also planned.
Balance Sheet Update
The “clean-up” of the old, risky loan book is progressing as planned. The “Non-Core” book has shrunk by 59% YoY, and the Asset Reconstruction (ARC) business has recovered ₹1,273 crores in cash over the last 12 months.
However since the concall the share price has continued to decline. Am I overlooking something?
Disc - Invested
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Results are good.. wealth management segment is cyclical in nature. Due to current sideways market, it will feel the pressure but in next bull run, it should outperform.
Invested with large allocation
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Other Wealth management companies have reported good numbers in Wealth mgmt
For e.g: Nuvama wealth and private wealth grew by 25%+ and 35%+
Motilal private wealth also grew by 30%+
But market is punishing JM financial because their welth management did not perform well this quarter and it might be due to still their major revenue might be coming from Broking transaction based income
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It is because their wealth management is not doing well compared to peers
Look at Nuvama’s wealth management and Private wealth management
JM’s wealth management is similar to Motilal’s wealth management where majority of revenues still come from Transaction based broking income. That is why motilal gets low PE in wealth management sector. Motilal has made their revenue quality much better in last 1 year by reducing broking income share
Also their RM addition and branch addition is not going very aggresive as they told in Q1
Just check RM addition, AUM addition and Wealth mgmt branch addition QoQ (Q2FY26 vs Q1FY26)
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I am from non-finance background but have been tracking JM Financial. Any specific views on whether management is walking the talk w.r.t their individual businesses?
The following company came up few Qtrs. back in the watchlist, because JM financial had gone through serious mess in the past for its real estate exposure and the company’s conscious attempt to clean that exposure free the stucked capital by moving to Incremental ROE business. so, the following Article , specifically focus majorly on just one primary question, if the clean up done in the business is for the sole purpose for incremental ROE or company is into rethinking mode what lies ahead?, well obviously not talking company specific , but any other company would be on the incremental ROE path, the second question is once the path towards incremental ROE taken , whether company would move forward without looking backwards ( Repeating same mistakes again) and achieve that milestone without Distract itself? , Let’s Analyse:
The purpose of writing the post is recently I had attended the conference call of JM Financial ltd of Q4 2026 , but I did not got chance to ask question to management due to lack of time , However my specific question was on the ROE of private markets side, The company as a whole still employs more than 60% capital on the private market side , however the ROE generated from the same is merely 8.3%. The headline numbers deserves attention because overall from 9.4% last year to 11.7% ROE deserves appreciation. The point is Blended ROE for the company is 11.7% but the ROE of private markets is just 8.3%. Though overall ROE of company i.e. 11.7% is also not good because when a company gets its dirt business clean up , investors expect more and expectation of the management is also same they told that market as a whole will get normal around q3 of FY-27.
I would like to present some numbers and calculation of the above ROE for the readers reference and able to articulate with the numbers:
So , from the above calculation you can see that company is consuming a lot more capital and dragging ROE down. However, company sees a lot more potential in the syndication business and also looking to grow other business as well but by continuing with huge chunk of capital into business with an ROE of 8% to 8.5% , will drag overall ROE downwards. so if want to build a thought process behind why the company would like to continue with it, it creates fundamentally Two questions:
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Whether markets for other business are facing slowdown hence management is not aggressively redeploying, seems nothing like that because management itself indicated that management is growing its housing finance business , wealth management, asset management business and yes forgot to mention its capital market and advisory business ( which management indicated that their second half will be quite better).
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Or the company is trying to create an ecosystem because it serves the client in many ways, for me Second question seemed more relevant to me.
Going forward, I would like to present another calculation of ROE, because 8.3% as we are seeing is still not adjusted , I would like to give a read:
So, don’t misread that revenue is falling, but moving towards high fees and high margin business dragged revenue down but most importantly when the company which had impairment reversal , if not considered then adjusted ROE would be around 4.3%. So, not a doubt on the operational capability of the company but a doubt on operational profitability of the company, which lands us on the primary question which we asked firstly whether company is on a path to generate an ROE of 15% or 15% ore more.
Coming on the valuation side, company is trading around 1.1 to 1.15 price to book , so I find that reason very conclusive that why JM financial is running around their book values.
The positive thing about the company is management is serious about return ratios and a shareholder focused approach. However company has to relook their capital deployment strategy because if company had successfully pivoted the stock won’t trade around book values and If ROE which if optimally hovers around 14-15% next year, then a rerating based on PE gets triggered because company is already qualified into capital light business from capital heavy business, and its competitors like Nuvama Wealth Management trades around PE of 25-27. so looking forward if JM financial comes around then a PE rerating is awaited.
So, concluding the article, lastly the management had came around various dark clouds and hopefully they will still come out by rising once again.
Happy Reading.
Disclaimer - I am not an financial advisor , this is for only educational purposes and for the love of Reading.
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