Recommendation from Finance Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.

JM Financial Ltd : STRATEGIC SHIFT BOOSTING PROFITABILITY & VALUE

HERE IS WHY
✓ Decisive pivot to high-ROE, asset-light businesses
✓ Strong traction in wealth and asset management
✓ Attractive valuation relative to peers

I ndia’s financial services sector continues to demonstrate strong momentum, underpinned by robust economic growth, deepening capital markets, and increasing investor participation. The industry’s outlook is further buoyed by regulatory reforms, technological advancements, and a growing emphasis on financial inclusion. In this evolving landscape, JM Financial remains well-positioned as a diversified financial services group, leveraging its expertise in investment banking, asset management, and lending solutions. The company’s focus on innovation, prudent risk management, and client-centric approach enables it to capitalise on emerging opportunities and navigate the dynamic market environment.

As of FY25, the company’s largest business segment is Investment Banking, contributing 40 per cent of revenue, driven by strong performance in IPOs, QIPs, and block deals, where it ranked No. 1 in terms of volumes. Its Mortgage Lending business, which includes loans against residential and commercial real estate, accounted for 30 per cent of revenues.

The Asset and Wealth Management segment, contributing 28 per cent, has seen significant growth, supported by mutual fund management, equity brokerage, and wealth advisory. Meanwhile, the Alternative & Distressed Credit business saw a decline in revenue share to 5 per cent, reflecting the strategy to run down the business. With a strong presence in capital markets and a growing emphasis on wealth and asset management, JM Financial continues to strengthen its position as a key player in India’s financial services sector.

JM Financial is undergoing a strategic reset to shift away from low-return, capital-heavy businesses like wholesale mortgages and asset reconstruction business (ARC), and refocus on its high-ROE, fee-based capital market operations. Despite challenges over FY18–FY23, JM retained its leadership in investment banking, institutional broking, and advisory services, while also building out new verticals like wealth management, AMC, and retail broking.

With this decisive pivot JM Financial is well-capitalised, with a clear roadmap to scale its private markets, wealth, and asset management businesses. It is targeting improved ROE and higher dividends, marking a long-awaited inflection point.

In Q4FY25, JM Financial successfully closed several equity capital market deals, cumulatively helping to raise over ₹80,000 crore during the year. The Private Wealth AUM rose 11 per cent YoY to ₹75,804 crore, while the SEBI Margin Trade Financing book grew 12 per cent YoY to ₹1,583 crore. Retail and Elite Wealth AUMs grew by 8 per cent and 36 per cent YoY, reaching ₹31,191 crore and ₹2,584 crore, respectively. The mutual fund business also witnessed strong traction, with the closing AUM doubling to ₹13,419 crore. During the quarter, total income stood at ₹1,027 crore, down 8 per cent YoY, while net profit grew to ₹235 crore from a loss of ₹674 crore in Q4 FY24.

JM Financial’s stock trades at a Price to Book (P/B) ratio of 1.20x, below the industry average of 1.64x and higher than its 5-year median of 1.0x, presenting a decent valuation opportunity. Return ratios remained decent in Q4 FY25 with an ROE of 9.39 per cent and ROA of 2.86 per cent. Given its compelling valuation and improving fundamentals, we recommend a BUY on JM Financial.