JM Financial

JM Financial has significantly advanced its strategic pivot to an off-balance sheet model, reducing its wholesale loan book (real estate, financial institutions, MSME) from approximately Rs. 7,500 crores as of March 31, 2024, to Rs. 3,570 crores by March 31, 2025. This substantial reduction of over 50% was achieved with minimal balance sheet impact. The company aims to maintain a real estate book of Rs. 2,500-3,000 crores and build a corporate plus bespoke book of Rs. 6,000-7,000 crores, targeting a total private market business book of around Rs. 10,000 crores within three years, with a net debt-to-equity of 1x.

The company reported a robust 22% quarter-on-quarter increase in income from fees, commissions, and brokerage, reaching Rs. 435 crores in Q4 FY25. For the full year FY25, this income stream (excluding ARC and NBFC) grew 15% year-on-year to Rs. 1,407 crores. Concurrently, impairment on financial instruments saw a significant reduction to Rs. 7 crores in Q4 FY25, down from Rs. 117 crores in the previous quarter. Total provisions over the last two years aggregated to Rs. 1,000 crores, with management confident of recovering approximately Rs. 300 crores annually over the next three years.

JM Financial's Wealth Management business achieved an AUM of approximately Rs. 1.1 lakh crores, marking an 11% year-on-year increase. Notably, the non-retail recurring AUM surged by almost 50% year-on-year, from Rs. 12,500 crores to Rs. 19,000 crores. The Mutual Fund business also demonstrated strong growth, with its AUM doubling in the last year to approximately Rs. 13,400 crores. Management fees for the Asset Management segment in Q4 FY25 increased 1.4x compared to the prior year, reaching Rs. 13 crores.

The Affordable Home Loans business continues its growth trajectory, with AUM increasing over 26% year-on-year to approximately Rs. 2,830 crores. The business currently operates through 128 branches and aims for significant expansion, targeting an AUM of Rs. 5,000 crores by FY27 and Rs. 10,000 crores by FY30. The branch network is projected to grow to around 200 by FY28 and 275 by FY30. Profitability is also expected to improve, with ROE targeted to reach 11.5-12% by FY28 and approximately 14% by FY30, up from the current 8.5%.

The Board recommended a dividend of Rs. 2.7 per share, marking the highest dividend ever from operating profits. Management expressed confidence in sustaining high dividend payout ratios, targeting over 50% for Corporate Advisory/Capital Markets and 40-50% for Private Markets. Vishal Kampani stated that if profitability continues, the company aims to double its dividend again in another three years, following a doubling over the past three years. The company plans to deploy approximately Rs. 2,800 crores from its Rs. 5,000 crores treasury assets back into businesses, retaining Rs. 2,000-2,200 crores in cash.

The Alternative and Distressed Credit (ARC) business saw its best collection year last year, recovering approximately Rs. 1,300 crores and significantly reducing debt. Management expects a turnaround in profitability for this segment in the current and next fiscal years. While most legacy assets are resolved or in advanced stages of resolution, the Unitech asset remains the only major one without significant progress. However, recent Supreme Court directives suggest a potential settlement, which management is awaiting. The company's ARC strategy focuses on partnerships with high-quality corporate clients and secured retail assets, avoiding a full-blown retail collections business due to high operating costs.