05 October 2024

Retail Equity Research

CMP Rs. 143
JM Financial Ltd Rating: Overweight
Finance & Investments
BSE CODE: 523405 NSE CODE: JMFINANCIL

JM Financial reported mixed Q1 FY2025 results, Company Data

with consolidated revenue declining 16.6% YoY to Market Cap (cr) Rs. 13,667.33
Rs 1,094 crore, but net profit growing 5.9% YoY to Enterprise Value (cr) Rs. 17,922.53
Rs 187 crore. The revenue decline was primarily Outstanding Shares (cr) 95.58
due to lower fees and commission income, which 52 week high Rs. 158.00
52 week low Rs. 69.00
fell 7.3% YoY. However, brokerage income saw
1m average volume (lacs) 326.42
strong growth of 76.3% YoY.
Face value Rs. 1.00
Segment-wise, Investment Banking revenue re- Consolidated (cr) FY22 FY23 FY24
mained flat YoY, while Mortgage Lending declined Sales 3724.39 3290.56 4785.84
1.2%. The Alternative & Distressed Credit segment Growth(%) 16% -12% 45%
turned loss-making this quarter. Asset Manage- EBITDA 2466.59 2162.35 2821.49
ment, Wealth Management & Securities Business EBITDA Margin(%) 66.2% 65.7% 59.0%
saw robust 61.5% YoY growth. PAT 773.16 597.29 409.84
Growth(%) 31% -23% -31%
Near-term headwinds persist from regulatory re- EPS 8.1 6.3 4.3
strictions on debt capital market activities and P/E 8.3 9.5 17.4
lending against shares. However, the diversified P/B 0.8 0.7 0.8
business model provides some cushion. The com- EV/EBITDA 7.0 8.9 9.1
pany is undertaking strategic initiatives like in- ROE(%) 10% 7.3% 5%
creasing stake in JM Financial Credit Solutions to ROCE(%) 11% 8.9% 7.7%
89.67% and divesting stake in the asset recon- ROIC(%) 10% 7.7% 0.7%
struction business.. D/E 1.76 1.96 1.91

Concalls Highlights
• Financial Performance & Business Segments: Q1 FY25 revenues grew by 1% to ₹1,094 crores, and profit after tax in-
creased by 3% to ₹171 crores. Retail mortgage loans saw a significant rise of 61% year-on-year, while SEBI margin financing
more than doubled. The company is transitioning towards an off-balance sheet syndication model in key asset classes.

• Strategic Moves & Stake Acquisition: JM Financial Limited is increasing its stake in JM Financial Credit Solutions from 47%
to 95.6%, investing ₹1,282 crores. Additionally, the company is acquiring a 72% stake in JM Financial ARC, solidifying its inter-
ests in these entities.

• Operational Strategy & Outlook: Focus on four key verticals: corporate advisory, wealth management, private credit syn-
dication, and affordable home loans. The company aims for a simplified business structure with strong cash flow expectations,
despite challenges in home finance disbursals in Tier 2 and Tier 3 cities.

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 Retail Equity Research

Key Highlights
Diversified Business Segments:JM Financial operates across four primary segments—Investment Banking (35% of
FY23 revenue), Mortgage Lending (38%), Distressed Credit (9%), and Asset Management (18%). The company's
services span investment banking, private equity, institutional equities, mortgage lending, distressed credit recov-
ery, and wealth management.

Revenue & Loan Book Mix:The consolidated loan book as of March 2023 stood at ₹15,653 crores, dominated by
Wholesale Mortgage lending (54%), Retail Mortgage (12%), and Bespoke loans (17%). The revenue mix is primarily
driven by interest income (59%), fees and commissions (20%), brokerage income (10%), and gains on fair value
changes (6%).

Asset Quality & Investments:The company maintained a healthy asset quality with a GNPA of 3.4% and NNPA of
2.1% in FY23. As of March 2023, JM Financial had investments worth ₹3,585 crores, largely allocated to mutual
funds and security receipts.

Growth in Wealth Management & AUM:JM Financial's wealth management AUM grew significantly, with Private
Wealth AUM at ₹56,515 crores and Retail Wealth AUM at ₹23,828 crores as of FY23. The mutual fund business
also saw substantial growth, with AUM reaching ₹10,000 crores.

Strategic Capex & Digital Focus:The company invested ₹90 crores in building its digital capabilities and strengthen-
ing its asset management and credit businesses. It plans to continue making significant investments in technology
and expanding its asset management operations over the next two years.

Strategic Initiatives: JM Financial is transitioning to an off-balance sheet syndication model across various asset
classes, with a focus on real estate and corporate credit. It is also strengthening its presence in wealth manage-
ment, with assets under management (AUM) exceeding ₹1 lakh crores and mutual fund AUM reaching ₹10,000
crores, reflecting robust growth in this segment.

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 Retail Equity Research

Quarterly Financial Consolidated

Profit and loss account (Rs Cr)

Jun-23 Sep-23 Dec-23 Mar-24 Jun-24

Sales 1,066.65 1,197.38 1,235.99 1,260.70 1,077.05
Growth(%) 26% 12% 3% 2% -15%
Expenses 472.77 534.77 429.87 579.97 462.16
Operating Profit 593.88 662.61 806.12 680.73 614.89
Growth(%) 54% 12% 22% -16% -10%
Other Income 14.47 16.58 24.97 -831.44 16.82
Depreciation 12.03 13.16 13.68 14.16 16.24
Interest 365.88 388.10 400.29 407.25 370.22
Profit before tax 230.44 277.93 417.12 -572.12 245.25
Tax 55.14 72.39 95.56 102.76 59.47
Net profit 165.90 194.94 277.68 -228.68 170.70
Growth(%) 66% 15% 30% -221% 234%

Financial Consolidated
Profit & Loss (Rs Cr)

Mar-20 Mar-21 Mar-22 Mar-23 Mar-24

Sales 3,445.91 3,211.15 3,724.39 3,290.56 4,785.84
Growth(%) -1% -7% 16% -12% 45%
Expenses 933.12 1,009.05 1,295.58 1,170.08 2,017.38
Operating Profit 2,512.79 2,202.10 2,428.81 2,120.48 2,768.46
Growth(%) -9% -12% 10% -13% 31%
Other Income 7.63 15.37 38.74 52.51 -800.54
Depreciation 41.04 39.75 37.78 41.87 53.03
Interest 1,385.86 1,110.87 1,081.73 1,178.51 1,561.52
Profit before tax 1,093.52 1,066.85 1,348.04 952.61 353.37
Tax 315.98 260.79 355.67 243.85 325.85
Net profit 544.98 590.14 773.16 597.29 409.84
Growth(%) -5% 8% 31% -23% -31%

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Balance Sheet (Rs Cr)

Report Date Mar-20 Mar-21 Mar-22 Mar-23 Mar-24

Equity Share Capital 84.12 95.27 95.41 95.48 95.56
Reserves 5,554.65 6,904.63 7,590.80 8,040.78 8,394.94
Borrowings 11,755.67 12,405.19 13,498.04 15,939.46 16,227.73
Other Liabilities 3,351.08 3,973.08 4,477.15 5,136.87 4,873.94
Total 20,745.52 23,378.17 25,661.40 29,212.59 29,592.17
Net Block 449.98 422.86 413.71 504.85 571.54
Capital Work in Progress 0.69 0.86 3.05 7.01 4.43
Investments 4,014.45 5,801.65 3,639.29 3,584.49 4,724.23
Other Assets 16,280.40 17,152.80 21,605.35 25,116.24 24,291.97
Total 20,745.52 23,378.17 25,661.40 29,212.59 29,592.17

Cash Flow (Rs Cr)

Mar-20 Mar-21 Mar-22 Mar-23 Mar-24

Cash from Operating Activity 3164.13 969.28 -3458.08 -2307.2 3635.05
Cash from Investing Activity -901.47 -2248.75 2613.92 -591.61 -2089.94
Cash from Financing Activity -2204.53 1295.95 1280.72 2159.89 162.45
Net Cash Flow 58.13 16.48 436.56 -738.92 1707.56

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 Retail Equity Research

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