JMFINANCIL - JM Financial Limited Share Price

In the earnings conference call held on May 13, 2025, management of JM Financial provided several forward-looking insights and highlighted key areas of growth.

1. Loan Book Reduction: The company has successfully reduced its wholesale real estate loan book from approximately Rs.7,500 crores in March 2024 to about Rs.3,570 crores as of March 2025. This aligns with their strategy of transitioning to an off-balance sheet model.

2. Capital Markets and Advisory: They reported strong performance in Corporate Advisory and Capital Markets with M&A and private equity syndication deals remaining robust. JM Financial is positioned as the top player in QIP deals in FY2025.

3. Wealth Management Growth: The Assets Under Management (AUM) in Wealth Management increased to approximately Rs.1.1 lakh crores, up 11% year-on-year. The recurring AUM for non-retail Wealth surged by about 50% from Rs.12,500 crores to approximately Rs.19,000 crores.

4. Home Loans Business: Their Affordable Home Loans AUM rose over 26% year-on-year, reaching approximately Rs.2,830 crores, supported by an expansion in branches from 128 today to a projected 200 by FY28.

5. Dividend Guidance: Management anticipates a continued high dividend payout ratio, targeting between 40% to 50%. For the current year, they proposed a dividend of Rs.2.7 per share, which is the highest dividend ever recommended from operating profits.

6. Future Earnings from Private Markets: They expect to leverage their strong capitalization to enhance profits in Private Markets, indicating a positive outlook with potential recoveries from Rs.1,000 crores in provisions expected over the next three years.

7. Recovery Expectations: Management forecasted reasonable visibility on recoveries, anticipating Rs. 300 crores yearly from the Rs.1,000 crores could be recovered.

Overall, JM Financial's management painted a favorable outlook, emphasizing strategic consolidations, growth in fee-based income, and a robust pipeline in their various business segments.

Major Questions and Answers from the Earnings Transcript:

1. Question: "There is a bit of positive surprise in the Corporate Advisory business... If any color you can give on what did we do in the quarter and how does this part of the business behave in terms of growth over the next two to three years?"

Answer: Yes, the M&A pipeline execution surged last quarter, bolstered by private equity syndication deals and market share gains in Institutional Equity. This segment operates at nearly 50% ROE and around 40% PBT margins. Given our robust pipeline, we anticipate continued strong growth in the coming years.

2. Question: "We are sitting with a good amount of cash... how will we use this in the private syndication business?"

Answer: Our strong capitalization positions us well to grow and maintain a generous dividend payout. Our Corporate Advisory and Private Markets are both well capitalized, and we expect a payout ratio exceeding 50%. If profitability remains strong, we may double dividends over three years from Rs. 2.7 shares.

3. Question: "What is the glide path for the private syndication business in the next two years, and what progress have we made in the last 12 months?"

Answer: We focused on controlling JM Financial Credit Solutions, employing Rs. 1,500 crores for that purpose. As our real estate book shrank from Rs. 10,000 crores to under Rs. 2,800 crores, we expect to recover Rs. 1,000 crores over three years, thereby enhancing earnings potential in private markets through innovative equity investments and co-investment partnerships.

4. Question: "What is our long-term strategy for the mortgage lending business?"

Answer: We have reduced our wholesale book due to regulatory changes and long recovery periods impacting ROA negatively. We emphasize high-quality developers and will focus on construction finance and syndication rather than increasing our loan book, aiming to sustain a healthy balance sheet with fees as the primary income source.

5. Question: "Regarding the net gain on fair value changes, how should we assess the core profitability of our businesses?"

Answer: The net gain includes realized and unrealized profits under Ind AS, marking everything to market. Investments in liquid mutual funds and other instruments contribute significantly, but as cash deployment increases in business rather than holding, we anticipate a reversion where interest income surpasses this gain over the next four to five years.

6. Question: "By when can we expect the resolution of legacy assets in the ARC?"

Answer: Excluding Unitech, we expect resolutions within this year and next. Our recent collection year was strong with Rs. 1,300 crores collected. Remaining assets are mostly in advanced stages or settlements, and we stand by our projections for upcoming recoveries.

These responses provide a concise depiction of JM Financial's performance and strategic direction as discussed in the earnings conference call.