Detailed narrative
Strong Q2 FY26 Performance Driven by Fees & Commissions
JM Financial reported a robust Q2 FY26 with an operating PAT of INR 270 crores. The company achieved its highest-ever fees and commission income at INR 341 crores, demonstrating a healthy 20% year-on-year growth for two consecutive quarters. For the first half of FY26, profit after tax grew significantly by 80% year-on-year to INR 724 crores, translating to an annualized ROE of 14.4%. An interim dividend of INR 1.5 per share was also declared, aligning with the strategy of increasing shareholder distribution.
Robust Capital Markets and Private Markets Turnaround
The Corporate Advisory and Capital Markets segment delivered strong results, with profit before tax reaching INR 187 crores (up 42% YoY) and profit after tax at INR 142 crores (up 41% YoY) for Q2 FY26. The Private Market Business showed a significant turnaround, moving from a loss of INR 68 crores in the prior year to a profit before tax of INR 101 crores and profit after tax of INR 77 crores this quarter. Management expressed confidence in this segment, targeting an ROA of 3-4% and expecting the book to grow comfortably at 20%.
Strategic Investments in Wealth and Asset Management
JM Financial continues its strategic investments in Wealth and Asset Management. The Wealth Management business saw its recurring AUM grow 26% year-on-year to INR 32,000 crores, and its sales and relationship manager strength increased by 43% YoY. While Q2 FY26 PAT for Wealth Management was INR 30 crores, profits are partly impacted by ongoing investments in digital businesses, which are targeted to achieve breakeven by FY27. The Asset Management business, currently in a buildup phase, reported a loss of INR 10 crores but aims to double its AUM and reach breakeven within the next couple of years.
Growth and Asset Quality in Affordable Home Loans
The Affordable Home Loans business demonstrated strong growth, with its AUM increasing 28% year-on-year to INR 3,031 crores. Revenue for Q2 FY26 grew 41% year-on-year to INR 109 crores, and profit after tax almost doubled to INR 13 crores. The Gross NPA for this segment stands at 1.6%, with 30-plus DPD at 6%. The ROA for this business is reported at 2.1%, and management anticipates credit costs, which were slightly higher in the first half, to normalize in the upcoming quarter.
Significant IPO Pipeline and ARC Recovery Efforts
The company boasts a robust IPO pipeline, with documents filed for 56 IPOs aggregating approximately INR 120,000 crores, expected to be executed over the next 6 to 12 months. JM Financial anticipates earning a commission share of 80-100 bps from these deals. In its JM Financial ARC, the company successfully recovered approximately INR 1,273 crores over the last year, leading to a 27% year-on-year reduction in borrowing to INR 1,589 crores. Management is confident in continued recoveries and asserts the absence of any 'sticky assets' in its portfolio.
Long-Term Strategic Vision and Demerger Outlook
JM Financial views capital markets, asset management, and wealth management as core growth engines for the next decade, leveraging India's evolving savings and investment patterns. The company plans to continue investing in technology and physical infrastructure to solidify its position as a preferred banker and institution. While a demerger of the Wealth Management business is a long-term consideration for value unlocking, management indicated it requires a much larger scale and is not planned for the next 6-18 months. The affordable home loans business is targeted for an IPO in FY28, following 10 years of operational history.