JM Financial

JM Financial reported a strong Q3 FY26, with consolidated profit after tax (PAT) increasing 50% year-on-year to INR313 crores. Adjusted for one-time^📎 items like an INR113 crore income tax refund and INR21 crore new labour code impact, the operating PAT for Q3 FY26 stood at INR244 crores, a 17% increase year-on-year. For the nine months of FY26, consolidated PAT crossed INR1,000 crores, growing 69% year-on-year to INR1,037 crores, while adjusted operating PAT grew 58% to INR968 crores. The company's consolidated net worth, excluding minority interest, reached INR10,418 crores, translating to a book value per share of approximately INR109.

The Corporate Advisory and Capital Markets segment saw its net revenue increase by 30% year-on-year to INR210 crores in Q3 FY26, with operating profit after tax rising 12% to INR89 crores. The company closed 12 capital market transactions aggregating to INR36,000 crores and has 54 IPOs filed, totaling approximately INR121,000 crores, expected to be executed over the next 12 to 18 months. Management indicated that the slow execution of IPOs is due to market volatility^🌐 rather than regulatory hurdles. Over the longer term (5-7 years), the company targets 13-15% revenue growth and high-teens profitability growth in this segment, driven by India's strong economic trajectory and a robust deal pipeline.

The Wealth and Asset Management business continues its rapid expansion, with recurring AUM growing 33% year-on-year to INR33,100 crores. Net revenue for Q3 FY26 increased 7% to INR181 crores, though operating profit after tax declined to INR19 crores from INR30 crores last year, primarily due to significant investments in talent, physical infrastructure (branches increased from 11 to 73, franchisees from 27 to 922), technology, and digital capabilities. The company expects the investment phase to complete in the next 1-2 years, targeting a mid-teens Return on Equity (ROE) for this business by FY26-FY29, with AUM per RM expected to expand upwards of 25% per annum over the next 2-3 years.

The Private Markets segment, encompassing Private Credit and Investments, demonstrated strong performance, with Q3 FY26 operating profit after tax after minority interest surging 82% year-on-year to INR111 crores. For the nine months, operating profit before tax grew fivefold to INR624 crores. The company successfully closed a large syndication transaction of approximately INR3,300 crores during the quarter. The focus loan book remained stable around INR4,000 crores, with a target of 20% year-on-year growth over the next three years, alongside a 30-40% increase in syndication volumes. The real estate loan book has significantly contracted from INR10,000 crores to INR1,000 crores, with management expecting a pickup in activity over the next 2-3 years. The company also expects to recover INR700-750 crores from ARC and additional assets over the next five quarters.

The Affordable Home Loans business continued its growth trajectory, with AUM increasing 23% year-on-year to approximately INR3,200 crores. Revenue for Q3 FY26 grew 27% year-on-year to INR118 crores, and operating profit after tax after minority interest rose 53% to INR22 crores (from INR14 crores last year). The gross NPA ratio significantly improved from nearly 1% to 0.26% year-on-year, attributed to the sale of INR57 crores worth of gross NPAs without impacting the P&L. Management aims to maintain a calibrated 23% AUM growth and expects the business to achieve early teens ROE soon, supported by its fully capitalized status and healthy ROA.

JM Financial's capital allocation strategy focuses on deploying its INR24,000 crore balance sheet efficiently. A significant portion of capital is in the Private Markets business, partly a legacy from NBFCs, with plans to pay healthy dividends and avoid bloating capital further. The Home Loans business is fully capitalized for its projected 25% AUM growth over the next 3-4 years. Corporate Advisory and Capital Markets, being an extremely high ROE business, requires minimal additional capital. The company's surplus cash reduced year-on-year due to the buyout of minority investors in JM Financial Credit Solutions, and future surplus capital will be deployed on the loan side within the Private Markets space as the loan book grows.