CRISIL Research Ier Report Jm Financial 2014

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RESEARCH

CRISIL IER Independent Equity Research

Enhancing investment decisions

JM Financial Ltd

Detailed Report




Explanation of CRISIL Fundamental and Valuation (CFV) matrix

The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process – Analysis

of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a

five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a five-

point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP).

CRISILFundamental Grade Assessment

CRISILValuation Grade Assessment

5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)

4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)

3/5 Good fundamentals 3/5 Align (+-10% from CMP)

2/5 Moderate fundamentals 2/5 Downside (negative 10-25% from CMP)

1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP)

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Last updated: May, 2013

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the grading recommendation of the company.

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RESEARCH

JM Financial LtdWaiting in the wings for recovery in the capital markets

Fundamental Grade 4/5 (Superior fundamentals)

Valuation Grade 4/5 (CMP has upside)

Industry Capital Markets

1

July 28, 2014

Fair Value ₹49

CMP ₹41

For detailed initiating coverage report please visit: www.ier.co.in

CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters.

The prospects of JM Financial Ltd – an integrated financial services player with diverse

businesses such as lending, investment banking (IB), broking, asset management andalternative management – are closely linked to the capital markets. Though a strong IB

player, it was impacted by the sluggish capital market activity in FY14. The securities lending

business provided stability to earnings in the year. We expect the lending business to grow in

FY15 supported by the planned infusion of funds by Mr Vikram Pandit’s firm. The formation of

a stable government at the Centre has improved the sentiments in the capital markets.

Though broader factors such as containment of inflation and fiscal deficit, and policy actions

by the government are at play, we are hopeful of sustainable market recovery and expect

JM Financial to benefit from it. Hence, we maintain our fundamental grade of 4/5.

Lending business provides stability to earnings

As JM Financial’s IB and broking businesses were impacted by sluggish capital market

activity, the lending (securities funding) business’ PBT contribution to overall PBT almost

doubled from 42% in Q3FY11 to ~80% in Q3FY14. Owing to the company’s cautious lending

approach, the securities funding book was flat y-o-y at ~₹30 bn in FY14 but it helped the

company to maintain healthy asset quality.

Sustained activity in the capital markets should drive growth in IB and brokerage

Taking cue from positive sentiments after the formation of a stable government at the Centre,

we expect capital market activity to recover in FY15. We have factored in 35% y-o-y growth in

the IB, brokerage and wealth management businesses. However, our assumptions depend

on the sustainability in investors’ interest which necessarily would reflect the economic

environment – lowering of inflation and fiscal deficit, and improvement in economic growth;

this is a key monitorable.

New NBFC, being jointly set up with Mr Vikram Pandit, is at an advanced stage

The new NBFC, which the company is jointly setting up with Mr Vikram Pandit, is at an

advanced stage. The current commercial real estate securities lending business would be

hived off to the new NBFC, in which JM Financial would own 50.01% stake. The company

has already hired an operational team for the NBFC, comprising a part of the existingsecurities lending team. Since the operational team has experience in commercial real estate

lending, we expect the capital to be sufficiently utilised, which has been factored into our

FY15 estimates.

Expect revenues to grow 26% y-o-y in FY15; raise our fair value estimate to ₹49

We expect revenues to grow 26% y-o-y to ₹12.6 bn in FY15, largely driven by expected

growth in IB, brokerage and securities lending businesses. PAT is estimated to grow 24%

y-o-y to ₹2.6 bn in FY15. We continue to value JM Financial by the sum-of-the-parts (SoTP)

method. We raise our fair value to ₹49, which implies P/E multiple of 15.0x FY15E earnings.

At the current market price of ₹41, our valuation grade is 4/5.

KEY FORECAST

(₹ mn) FY11 FY12 FY13 FY14E FY15E

Operating income 8,478 8,628 10,416 10,020 12,581EBITDA 4,472 4,802 6,426 6,050 7,653

Adj net income 1,847 1,213 1,849 2,116 2,610

Adj EPS (₹) 2.5 1.6 2.5 2.8 3.4

EPS growth (%) 66.8 -34.4 52.1 13.9 19.7

Dividend yield (%) 1.5 1.5 2.3 1.5 2.9

RoCE (%) 9.4 8.8 10.7 10.0 12.8

RoE (%) 8.5 5.8 8.5 9.2 10.5

PE (x) 16.7 24.1 16.0 14.1 11.6

P/BV (x) 1.4 1.4 1.3 1.2 1.2

EV/EBITDA (x) 11.7 10.2 9.2 8.5 8.5

CMP: Current market price

Source: Company, CRISIL Research estimates

CFV MATRIX

KEY STOCK STATISTICSNIFTY/SENSEX 7831/26271

NSE/BSE tickerJMFINANCIL/

JMFINAN

Face value (₹ per share) 1

Shares outstanding (mn) 755.2

Market cap (₹ mn)/(US$ mn) 31,718/526

Enterprise value (₹ mn)/(US$ mn) 51,854/860

52-week range (₹)/(H/L) 46/18

Beta 2.1

Free float (%) 31.4% Avg daily volumes (30-days) 20,80,123

Avg daily value (30-days) (₹ mn) 40

SHAREHOLDING PATTERN

PERFORMANCE VIS-À-VIS MARKET

Returns

1-m 3-m 6-m 12-m

JM Financial 6% 46% 50% 69%

CNX 500 4% 17% 28% 34%

ANALYTICAL CONTACTMohit Modi (Director) [email protected]

Abhijeet Singh [email protected]

Vishal Rampuria [email protected]

Client servicing desk+91 22 3342 3561 [email protected]

1 2 3 4 5

1

2

3

4

5

Valuation Grade

F u n d a m e n t a l G r a d e

Poor

Fundamentals

ExcellentFundamentals

S t r o n g

D o w n s i d e

S t r o n g

U p s i d e

68.8% 68.6% 68.6% 68.6%

9.2% 9.3% 9.4% 9.5%

2.7% 3.2% 3.5% 3.0%

19.3% 19.0% 18.6% 19.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun-13 Sep-13 Dec-13 Mar-14

Promoter FII DII Others




2

Table 1: JM Financial’s business environment

ParametersInvestment banking andsecurities businesses

Securities funding andfund-based activities Asset management

Alternative

assetmanagement Others

Segment offerings Equity and institutional

broking, wealth

management, investment

banking

Margin funding, IPO

financing, promoter funding,

fixed income trading, loans to

real estate developers, asset

reconstruction and others

Asset management PE, real estate

funds

Geographic presence India, Singapore India India India India

Market position Fragmented industry; JM is

one of the leading players

Fragmented industry JM is a small player with a

market share of ~1% in

terms of mutual fund

assets under management

(AUM)

Fragmented

industry

Revenue contribution

FY14

FY15E

37%

41%

48%

48%

2%

2%

3%

2%

11%

7%

Revenue growth

(FY14-15E) 35% 21% 16% 1% -23%

Key competitors Fragmented industry; India

Infoline Finance Ltd (IIFL) is

one of the leading players

with 2.8% market share in

brokerage equity trading

Indiabulls Financials,

Religare Enterprises,

Edelweiss Capital, IIFL, etc.

HDFC AMC (12.5% market

share by mutual fund AUM

size), ICICI Prudential

AMC (11.7%), Reliance

AMC (11.6%) and others

Edelweiss

Capital, Motilal

Oswal and

foreign brokers

Revenue drivers Economic conditions, capital market activities

Source: Company, CRISIL Research



RESEARCH

JM Financial Ltd

3

Grading Rationale

Well positioned to benefit from pick-up in the capital markets

JM Financial continues to be a leading player in the capital markets with a strong presence in

IB. A strong brand name and long-time presence have ensured JM Financial long-term

relationship with large and mid-size companies. However, deal execution significantly

moderated in FY14 due to subdued macro-economic environment and weak capital market

activity.

With the formation of a stable government at the Centre, which was a key monitorable, we

expect capital market activity to pick up in FY15. We continue to expect GDP growth to

improve from 4.9% in FY14 to 6.0% in FY15, contingent to favourable monsoons in India and

easing of international crude oil prices. The recent surge in capital market flows has rekindled

interest among corporates and banks to raise funds through the capital markets; we expect

JM Financial to be a key beneficiary of the potential development.

Lending business provides earnings stability

As JM Financial’s IB and broking businesses have been impacted by the sluggish capital

markets, the lending (securities funding) business’ PBT contribution to overall PBT rose from

42% in Q3FY11 to ~70% in FY14. The securities funding book is currently valued at ₹30 bn

(46% developer loan, 26% margin funding, 23% sponsors funding). Sequentially in FY14, the

asset size remained flat because of the company’s cautious stance owing to a weak economic

environment.

Table 2: Lending book - peer comparison

Players ₹ bn (FY14)

IIFL 109

Religare Enterprises 99 (Q3FY14)

Edelweiss Financial 86

Motilal Oswal Financial 4

Source: Companies, CRISIL Research

Cautious stance in asset fund ing has enabled healthy asset quality

Due to the company’s cautious lending approach, in a weak macroeconomic environment, the

asset quality has remained stable. The company had two non-performing asset (NPA)

accounts in the margin funding segment, out of which it resolved one by selling the collateral –

property – and recovered 90%; the other NPA account has been fully provided for. JM

Financial has adequate risk management practices in terms of sufficient collaterals/ security.

Its ability to manage asset quality, especially in an economic downturn, will be tested. Asset

quality in developer loans too remains to be tested as this book has not yet seasoned since

JM Financial recently entered this segment. In addition, a strong balance sheet continues to

support the funding business. The business is currently comfortably leveraged at ~3x, which is

lower than some of its peers. The company also maintains strong risk management practices;

as part of it the company maintains treasury funds worth ₹3,000 mn for this business.

JM Financial’s lending book was flat y-o-y

owing to its cautious stance


16 18 20

30 30

0

5

10

15

20

25

30

35

FY10 FY11 FY12 FY13 FY14

(₹ bn)

Lending boo k

Loan book largely comprises developer

loans and margin funding


Lending forcommericalreal estate

46%

Lending tosponsors

23%

Margin

funding14%

Loan

againstshares12%

Corporatelending

5%

Equity fund-raising has been sluggish in

FY14

Source: Industry, CRISIL Research

1,145

407784 688

2,282

2,968

3,784

2,765

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

FY11 FY12 FY13 FY14

(₹ bn)

Equity Debt




4

Figure 1: NIMs have improved because of a profitable mix Figure 2: Asset quality has largely been healthy

Source: Company, CRISIL Research Source: Company, CRISIL Research

Subdued profitability in the IB business; expected to improveafter surge in capital market activity

As mentioned, a weak macro-economic environment took a toll on JM Financial’s IB and

securities lending businesses. Over the past two years, the company has executed more of

debt-raising deals, on which it earns a lower margin (by around 90 bps), vis-à-vis equity-

raising deals. Deal execution in IB also remained tepid because of a weak economic

environment. Resultantly, the company’s capital markets-linked revenues have been muted.

However, with rekindled interest in the capital markets following a stable government at the

Centre, we believe that JM Financial is well positioned to benefit from the opportunity.

Post-election favourable environment to benefit brokerage industry

Over the past few years, the broking industry has been in a consolidation phase due to the

weak market environment, incessant pressure on broking yields and high competition. In

2010, Axis Bank acquired the IB and broking units of Enam Securities. Fortune Financial

acquired Antique Stock Broking’s IB and research divisions. JM Financial remains a small

brokerage player, with market share ~1%, and primarily focuses on the high-yielding cash

segment for HNIs and financial institutions. The blended broking yield for JM Financial is

currently ~4 bps. After its split from Morgan Stanley in FY07, JM Financial acquired ASK

Securities in FY08 and scaled up its institutional equities business. Currently, it has research

coverage on over 160 stocks, which helps it to cater to over 100 institutional clients. JM

Financial had ₹150 mn exposure to National Spot Exchange Ltd (NSEL), which has been

completely provided for in FY14.

Though we expect the company to maintain its market share in the brokerage business over

FY15, we expect revenues and profitability to improve given the improvement in investor

sentiment and the company’s focus on equity brokerage.

4.0% 4.2% 4.5%5.0% 4.6%

6.7% 6.8% 6.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Q 1 F Y 1 3

Q 2 F Y 1 3

Q 3 F Y 1 3

Q 4 F Y 1 3

Q 1 F Y 1 4

Q 2 F Y 1 4

Q 3 F Y 1 4

Q 4 F Y 1 4

Net interest margin

0.1% 0.1%

0.9%0.8%

0.9%

1.4%

1.0%

0.4%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Q 1 F Y 1 3

Q 2 F Y 1 3

Q 3 F Y 1 3

Q 4 F Y 1 3

Q 1 F Y 1 4

Q 2 F Y 1 4

Q 3 F Y 1 4

Q 4 F Y 1 4

Gross NPA

JM Financial’s share in broking lower

than peers’

PeersMarket share – equity

broking (FY14)

IIFL 2.8%

Edelweiss 3.0% (Q1FY14)

Religare 1.9% (Q3FY14)

Motilal Oswal 1.6%

JM Financial ~1.0%




RESEARCH

JM Financial Ltd

5

Figure 3: Growth in equity turnover moderated over the past

few years

Figure 4: JM Financial’s share in the equity brokerage

segment

Source: NSE, BSE, CRISIL Research Source: NSE, BSE, CRISIL Research

Global plans of IB and broking at a nascent stage

The company has set up a new office in Singapore after receiving the capital market services

licence in Q4FY14. In Q4FY14, it earned revenues of SG$3 mn for an M&A deal – the

acquisition of a US-based IT company by a French firm. With this deal, the operations in

Singapore broke even. The management has indicated that the Singapore office’s deal

pipeline is healthy.

AMC business expected to face headwindsJM Financial holds a marginal presence in the AMC business (market share of ~1%) with

AUM of ₹60 bn in FY14, down 19% y-o-y; in contrast, the mutual fund industry grew at a

healthy pace of 18%. For JM Financial, the debt segment constitutes ~90% of its total AUM,

suppressing company’s AMC revenues as yields in liquid mutual funds and the debt segment

are lower by 100-150 bps than in the equity segment. We expect the AMC business to

continue to face headwinds because of relatively small scale and high competition; however,

the capital markets sentiments that have turned positive could positively impact the AMC

business.

Turning focus on the ARC businessThe gross NPA ratio of Indian commercial banks increased from 3.40% in FY13 to 4.20% in

H1FY14, creating a significant opportunity for the asset reconstruction (ARC) business. JM

ARC’s AUM increased from ₹11 bn in FY13 to ₹36.5 bn in FY14, in which JM has a share of

₹5.8 bn. The company has largely acquired credit cards and corporate loans in the ARC

business. With significant growth opportunity, the company is incrementally putting more

attention on the business to tap the opportunity. The company plans to raise capital from

shareholders to infuse funds in the business to sufficiently capitalise it for potential growth.

37 4272 103 185

149232 339 356 420 509

172%

13%

71%

43%

79%

-19%

56%46%

5%18% 21%

-50%

0%

50%

100%

150%

200%

0

100

200

300

400

500

600

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4

(₹ tn)

Equity turnover (BSE + NSE) Growth y-o-y (RHS)

2.2

2.8 2.83.1 3.2

3.4

2.62.4

0.7 0.8 0.8 0.9 0.9 0.7 0.6 0.7

0.8 1.0 1.01.1 1.0

0.8 0.7 0.8

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Q 1 F Y 1 3

Q 2 F Y 1 3

Q 3 F Y 1 3

Q 4 F Y 1 3

Q 1 F Y 1 4

Q 2 F Y 1 4

Q 3 F Y 1 4

Q 4 F Y 1 4

(%)

Cash segment FAO segment Overall

The ARC business witnessed healthy

growth last year

The company invested ₹50-60 mn in

Q3FY14 on overseas expansion; the

new office in Singapore has already

achieved break-even





RESEARCH

JM Financial Ltd

7

New NBFC, jointly with Mr Vikram Pandit, at an advanced stage

The new NBFC, which the company is jointly setting up with Mr Vikram Pandit – with the latter

investing nearly US$ 100 mn – is at an advanced stage. The existing commercial real estate

securities lending business will be hived off to the new NBFC. The company has also put the

operational team, comprising a part of the existing securities lending team, in place. Since the

operational team has experience in commercial real estate lending, we expect the capital to

be sufficiently utilised, and have factored in the same in our FY15 estimates.

Funds infus ion in the ARC business by Mr. Pandit expected to be posit ive

In addition, the company is likely to set up a distressed asset fund (which invests in trusts),

jointly by Mr Pandit’s firm, with initial capitalisation of $100 mn. The fund infusion in the ARC

business is positive and indicates the aggressive plans of the company to scale up the

business. However, we have not factored in the estimate until we get further visibility.

Table 4: Peer comparison on various parameters

As of FY14 IIFL Edelweiss Financial Motilal Oswal Financial JM Financial Religare EnterprisesRevenues (₹ mn) 28,373 25,555 4,568 10,020 33,282

PAT (₹ mn) 2,781 2,202 395” 2,116 (7,837)

PAT margin (%) 10% 9% 9% 21% (24)%

Net worth (₹ mn) 21,753 30,950 11,754 23,621 33,544

Cash (₹ mn) 13,593 19,637 1,678 9,791 11,665

Debt (₹ mn) 105,202 129,480 1 29,921 141,688

Leverage (x) 4.8 4.2 0.0 1.3 4.2

RoA 2.2% 1.4% 3.3% 3.9% (3.9)%

Key parameters comparison

MF AMC AUM (₹ bn) 2.1 1.7 5.8 60.5 137#

Market share (%)- equity broking 2.8 3.0* 1.6 1.0# 1.9#Lending book (₹ bn) 109 86 4.1 30 99#

Lending share in total revenues (%) 69.5% 43.5% 18.8% 52.6%^ 61.3%

Lending share in total PBT (%) 74.1% 82.9% NA 71.2%^ 100%

Gross NPA (%) 0.86% 0.95% NA NA 1.17%

Net NPA (%) 0.33% 0.25% NA NA 0.65%

*Q1FY14, #Q3FY14; ̂ also includes other fund-based activities income; NA – not available; “PAT impacted due to NSEL exposure and adjusting that

which result in PAT of ₹771 mn; $ - trailing 12 months (TTM)


Table 5: Segment-wise details

Revenues (₹ mn) Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14

IB and securities

businesses 1,003 961 1,135 763 1,187 1,036 937 1,112 1,207 1,165 1,113 715 1,086

% growth q-o-q -30% -4% 18% -33% 55% -13% -10% 19% 9% -3% -4% -36% 52%

Securities funding and

fund-based activities 869 975 939 1,022 1,202 1,241 1,375 1,439 1,462 1,528 1,214 1,261 1,289

% growth q-o-q -27% 12% -4% 9% 18% 3% 11% 5% 2% 5% -21% 4% 2%

Alternative asset

management (26) 77 90 41 251 102 51 52 68 51 52 100 101

% growth q-o-q -125% -393% 17% -54% 507% -59% -50% 1% 30% -24% 2% 91% 1%

Asset management 77 67 78 82 75 72 67 83 66 64 62 68 72

% growth q-o-q 4% -13% 17% 5% -8% -5% -6% 23% -20% -4% -2% 10% 6%

Others 159 59 445 61 67 55 451 28 76 87 769 156 157

% growth q-o-q 77% -63% 654% -86% 10% -19% 723% -94% 172% 13% 786% -80% 1%

Total 2,081 2139 2,687 1,970 2,782 2,506 2,882 2,714 2,879 2,894 3,210 2,300 2,705

% growth q-o-q -28% 3% 26% -27% 41% -10% 15% -6% 6% 1% 11% -28% 18%

*Unadjusted for intersegment revenues




8

Table 6: Revenue mix

Revenue mix

(% of total revs) Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14IB 48% 45% 42% 39% 43% 41% 33% 41% 42% 40% 35% 31% 40%

Securities funding 42% 46% 35% 52% 43% 50% 48% 53% 51% 53% 38% 55% 48%

Alternative asset

management -1% 4% 3% 2% 9% 4% 2% 2% 2% 2% 2% 4% 4%

Asset management 4% 3% 3% 4% 3% 3% 2% 3% 2% 2% 2% 3% 3%

Others 8% 3% 17% 3% 2% 2% 16% 1% 3% 3% 24% 7% 5%

Table 7: Profit before tax (PBT)

Profit before tax (₹ mn) Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14

IB and securities

businesses 241 43 102 84 124 69 34 186 184 182 220 -29 80

as % of revenues 24.0% 4.5% 9.0% 10.9% 10.5% 6.7% 3.6% 16.7% 15.3% 15.6% 19.8% -4.1% 7.4%


fund-based activities 242 289 288 336 419 416 474 418 516 547 445 500 503

as % of revenues 27.8% 29.6% 30.7% 32.8% 34.8% 33.5% 34.5% 29.1% 35.3% 35.8% 36.7% 39.7% 39.0%

Alternative asset

management -139 20 35 -8 47 46 30 35 53 29 28 66 65

as % of revenues nm 26.4% 39.2% -19.3% 18.8% 45.2% 57.4% 66.2% 78.0% 56.0% 53.9% 66.0% 64.4%

Asset management 9 -14 -4 15 -20 7 4 9 3 5 5 9 19

as % of revenues 11.3% -20.3% - 4.6% 18.2% -27.1% 9.5% 5.2% 10.4% 4.9% 8.2% 8.5% 13.2% 26.4%

Others -8 19 20 19 13 39 11 (18) 23 29 -16 71 45

as % of revenues -4.7% 32.9% 4.5% 30.3% 19.5% 71.8% 2.4% -64.1% 29.9% 33.4% -2.1% 45.5% 28.7%

Total 345 358 442 445 583 578 552 630 780 791 683 617 712

Table 8: PBT contribution (%)

Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14

IB and securities

businesses 69.8% 12.0% 23.1% 18.8% 21.3% 12.0% 6.1% 29.5% 23.7% 23.0% 32.2% -4.7% 11.2%


fund-based activities 70.0% 80.7% 65.2% 75.5% 71.8% 72.0% 85.9% 66.5% 66.2% 69.1% 65.3% 81.0% 70.6%

Alternative asset

management -40.1% 5.7% 8.0% -1.8% 8.1% 8.0% 5.3% 5.5% 6.8% 3.6% 4.1% 10.7% 9.1%

Asset management 2.5% -3.8% -0.8% 3.4% -3.5% 1.2% 0.6% 1.4% 0.4% 0.7% 0.8% 1.5% 2.7%

Others -2.2% 5.4% 4.5% 4.2% 2.3% 6.8% 2.0% -2.9% 2.9% 3.7% -2.4% 11.5% 6.3%




RESEARCH

JM Financial Ltd

9

Key Risks / Monitorable

Linkage with equity market = inherent volatility in business

JM Financial’s business prospects are invariably related to the level of trading in the equity

market. The capital markets are inherently volatile, driven by economic and political factors as

well as public sentiment. Global factors too influence market fortunes. Though the company’s

diversified business portfolio is likely to provide some elbow room, IB, wholesale financing and

asset management are linked to the performance of the equity market. Thus, CRISIL

Research believes that the company’s business will continue to be driven by the state of the

equity market whereby any instability in the equity market could significantly impair JM

Financial’s ability to deliver strong earnings growth.

Asset quality in the lending book is a monitorable

The lending book constitutes a major portion of the overall PBT. For the lending business,

JM Financial has adequate risk management practices in terms of sufficient collaterals /

security. While this strategy has enabled the company to maintain healthy asset quality, it

remains a monitorable:

■ In FY14, owing to a weak economic environment, the margin funding segment had two

NPAs. Out of this, the company resolved one by selling the collateral and has recovered

more than 90%. The second NPA has been fully provided for.

■ Asset quality in the developer loan book is yet to be tested as this book has not yet

seasoned.

Asset quality is a key monitorable,

especially in the current weak

economic environment




10

Financial Outlook

Figure 7: Revenues expected to grow 26% in FY15 Figure 8: Securities funding dominates revenues


Figure 9: PAT margins expected to remain steady over the

next few years

Figure 10: Lower RoE due to high proportion of liquid funds

and low leverage


Revenue growth driven by improvement in capital markets

We expect revenues to grow 26% y-o-y in FY15 driven by expected growth in capital markets-

linked businesses, primarily IB and brokerage. Considering the recent spurt in capital market

activity, we expect revenues from IB and securities businesses to grow 35% y-o-y in FY15. As

mentioned, the company is hiving off its commercial real estate lending business into a new

proposed NBFC, jointly held with Mr Vikram Pandit whose firm will inject US$100 mn in it. We

believe that it is incrementally positive. We have assumed 21.0% growth in the securities

lending business.

Factored in capex for new office, no cash flow impact

JM Financial shifted its Mumbai-based corporate office from Nariman Point to Prabhadevi,

Mumbai in Q3FY14. The company has already incurred the acquisition cost of ₹2.2 bn and

there will be no cash flow impact of the same. The amount is currently lying in loans and

advances and will be capitalised in FY15.

8,478 8,628 10,416 10,020 12,581

47%

2%

21%

-4%

26%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

FY11 FY12 FY13 FY14 FY15E

(₹ mn)

Revenues Growth y-o-y (RHS)

52%42% 39% 37% 41%

36%43% 50%

48%48%

3% 3%3%

2%2%

4% 5% 2%3%

2%5% 7% 6% 11% 7%

0%

20%

40%

60%

80%

100%


Investment banking and securities

Securities funding and fund based activities

Asset managem ent Alternat ive asset managem ent

Others

1,847 1,213 1,849 2,116 2,610

21%

14%18%

21% 21%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

0

250

500

750

1,000

1,2501,500

1,750

2,000

2,250

2,500

2,750


(₹ mn)

Adj PAT PAT margin (RHS)

8.5

5.8

8.59.2

10.5

9.48.8

10.710.0

12.8

0

2

4

6

8

10

12

14


(%)

ROE (%) ROCE (%)



RESEARCH

JM Financial Ltd

11

Management Overview

CRISIL's fundamental grading methodology includes a broad assessment of management

quality, apart from other key factors such as industry and business prospects, and financial

performance.

Management - veteran in financial markets

Led by Mr Nimesh Kampani, Group Chairman, JM Financial operates through subsidiaries,

joint ventures and associate companies. Mr Nimesh Kampani has over four decades of

experience in the Indian capital markets and has played a pivotal role in not only making JM

Financial an integrated player but also fostered the development of the financial market. Each

business is headed by experienced professionals with in-depth understanding of the financial

markets and their relevant business segments.

■ Ms. Dipti Neelakantan is the Group Chief Operating Officer with about four decades of

experience in investment banking.

■ Mr V P Shetty is the Executive Chairman of JM Financial Products (which houses the

securities funding business). He has almost four decades of experience in the banking

industry.

■ The institutional business is headed by Mr Nimesh Kampani’s son – Mr Vishal Kampani,

MD and CEO of Institutional Securities.

■ The investment advisory and distribution business is headed by Mr Rajeev Chitrabhanu

and Mr Subodh Shinkar.

■ The mutual fund business is handled by Mr Bhanu Katoch, MD and CEO of this division.

The asset reconstruction division is handled by Mr Anil Bhatia, MD and CEO of this

business.

■ Mr Manish Sheth is the Group Chief Financial Officer with 10 years of experience in

financial consultancy, management consultancy, taxation, accounting and company laws.

Decentralised decision-making process

JM Financial has an experienced second line of management to support the different

businesses. Several members of the senior management, who lead various business

segments and manage day-to-day operations of the company, have been associated with the

company for almost a decade; this imparts stability to the firm’s operations. The respective

business units enjoy sufficient autonomy in decision making, which enhances operational

flexibility.




12

Corporate Governance

CRISIL’s fundamental grading methodology includes a broad assessment of corporate

governance and management quality, apart from other key factors such as industry and

business prospects, and financial performance. In this context, CRISIL Research analyses the

shareholding structure, board composition, typical board processes, disclosure standards and

related-party transactions. Any qualifications by regulators or auditors also serve as useful

inputs while assessing a company’s corporate governance.

Corporate governance at JM Financial is good. It is supported by a strong board and efficient

board practices. Further, it adheres to all regulatory requirements.

Board composition exceeds requirement under Clause 49

The board comprises six members, of whom five are independent directors. The board is

chaired by Mr Nimesh Kampani, Chairman and Managing Director. The number of

independent directors exceeds the requirement under Clause 49 of SEBI’s listing guidelines

(where 50% of directors must be independent when the chairman of the board is executive).

Independent directors are well qualified and experienced in various fields.

■ Mr E. A. Kshirsagar has over three decades of experience in consultancy. He is also

highly experienced in corporate strategy and structure, valuations, mergers and

acquisitions.

■ Dr. Vijay Kelkar, PhD in economics, is the Chairman of the India Development

Foundation, New Delhi.

■ Mr D. E. Udwadia is an advocate with over four decades of experience in law, mergers

and acquisitions.

■ Mr Paul Zuckerman, PhD in agricultural economics, is the Chairman and CEO of

Zuckerman & Associates Ltd.

■ Mr Keki Dadiseth, chartered accountant, has 27 years of work experience at Hindustan

Unilever Ltd.

The independent directors have an excellent reputation and standing in the business

community. Many of them serve on the boards of other large corporations. We believe that

their diverse experience and profiles strengthen board dynamics and processes.

Appropriate board processes

The company has audit, compensation, shareholders’ grievance and nomination committees

in place to support corporate governance practices. The audit committee is chaired by an

independent director, Mr E. A. Kshirsagar.

Scope to enhance disclosures

The company publishes segment-wise quarterly performance. There is scope to further

enhance the disclosure standards, for instance, disclosing more details about each of the

business segments such as providing (i) break-up of the funding book, (ii) yields and NIMs of

the funding book, etc.



RESEARCH

JM Financial Ltd

13

Valuation Grade: 4/5

We continue to value JM Financial by the SoTP method. We have raised our fair value

estimate from ₹42 to ₹49, which implies P/E multiple of 15x FY15E earnings. At the current

market price of ₹41, our valuation grade is 4/5.

Valuation methodology

We have used the P/E multiple method to collectively value JM Financial’s IB and broking

businesses. We have assigned the two businesses a forward P/E multiple of 10x based on

FY15 earnings. We have valued the securities funding business at P/BV of 1.4x. The asset

management business is valued by the percentage of AUM method. We have adjusted the

consolidated cash and investments for holding company’s investment in other businesses and

for cash and investment in the securities lending business.

Valuation methodology

Business Parameter Multiple Discount Remarks

Valuation

(₹ mn)

IB and securities Price/earnings

(P/E)

10x In line with average market P/E multiple 9,140

Securities funding and fund-

based activities

Price/book value

(P/BV) 1.4x

Healthy growth opportunity given strong capital markets

activity

21,150

Asset management % of AUM 4.0% Asset management 1,370

Alternative asset management Price/book value 1.3x Alternative assets - average fund valuation 1,710

Asset reconstruction Price/book value 1.5x 3,965

Other investments and cash* Book value Excludes (i) investment of₹1 bn in the alternative asset

management business, (ii) investment in asset

management and alternative investment management (iii)

Cash and investment in securities lending business (iv)

Expected fund infusion in securities and ARC business

1,380

Total valuation 38,400

No. of shares (nos. mn) 778

Fair value/share 49

Source: CRISIL Research

One-year forward P/E band One-year forward P/B band

Source: NSE, CRISIL Research Source: NSE, CRISIL Research

0

10

20

30

40

50

60

M a r - 1 1

J u n - 1 1

A u g - 1 1

O c t - 1 1

J a n - 1 2

M a r - 1 2

M a y - 1 2

A u g - 1 2

O c t - 1 2

D e c - 1 2

M a r - 1 3

M a y - 1 3

J u l - 1 3

O c t - 1 3

D e c - 1 3

F e b - 1 4

M a y - 1 4

J u l - 1 4

(₹)

JM 8x 10x

15x 18x 22x

0

10

20

30

40

50

60

M a r - 1 1

J u n - 1 1

A u g - 1 1

O c t - 1 1

J a n - 1 2

M a r - 1 2

M a y - 1 2

A u g - 1 2

O c t - 1 2

D e c - 1 2

M a r - 1 3

M a y - 1 3

J u l - 1 3

O c t - 1 3

D e c - 1 3

F e b - 1 4

M a y - 1 4

J u l - 1 4

(₹)

JM 0.6x 0.9x 1.2x 1.5x




14

P/E – premium / discount to CNX 500 P/E movement

Source: NSE, CRISIL Research Source: NSE, CRISIL Research

Share price movement Fair value movement since initiation

-Indexed to 100

Source: NSE, CRISIL Research Source: NSE, BSE, CRISIL Research

Peer valuation

M-Cap

(₹ bn)

P/BV (x) P/E (x) RoE (%)

FY13 FY14 FY15E FY13 FY14 FY15E FY13 FY14 FY15E

JM Financial Ltd 32 1.4 1.3 1.3 17.0 15.1 12.5 8.5 9.2 10.5

Edelweiss Financial Services 50 0.9 0.8 1.5 13.1 10.0 16.6 6.6 8.0 8.9

Motilal Oswal Financial Services 32 0.9 1.1 2.3 10.3 32.3 23.4 9.3 3.3 10.1

IIFL 39 0.9 1.1 1.6 6.3 8.3 12.8 15.1 13.5 14.5

Religare Enterprises Ltd 58 1.5 1.5 - - - - (16.7) (2.2) -

Geojit BNP Paribas Financial 9 0.9 1.2 - 5.4 - 17.1 18.6 (16.2) 11.0

Source: CRISIL Research, Industry

-80%

-60%

-40%

-20%

0%

20%

40%

60%

M a r - 1 1

J u n - 1

1

A u g - 1

1

O c t - 1 1

J a n - 1

2

M a r - 1 2

M a y - 1

2

A u g - 1

2

O c t - 1 2

D e c - 1

2

M a r - 1 3

M a y - 1

3

J u l - 1 3

O c t - 1 3

D e c - 1

3

F e b - 1

4

M a y - 1

4

J u l - 1 4

Premium/Discount to CNX 500

Median premium/discount to CNX 500

0

5

10

15

20

25

30

M a r - 1 1

J u n - 1

1

A u g - 1

1

O c t - 1 1

J a n - 1

2

M a r - 1 2

M a y - 1

2

A u g - 1

2

O c t - 1 2

D e c - 1

2

M a r - 1 3

M a y - 1

3

J u l - 1 3

O c t - 1 3

D e c - 1

3

F e b - 1

4

M a y - 1

4

J u l - 1 4

(Times)

1yr Fwd PE (x) Median PE

+1 std dev

-1 std dev

0

50

100

150

200

250

300

350

F e b - 0

9

M a y - 0

9

S e p - 0

9

J a n - 1

0

A p r - 1 0

A u g - 1

0

N o v - 1

0

M a r - 1 1

J u l - 1 1

O c t - 1 1

F e b - 1

2

M a y - 1

2

S e p - 1

2

J a n - 1

3

A p r - 1 3

A u g - 1

3

D e c - 1

3

M a r - 1 4

J u l - 1 4

JM Financial CNX 500

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

10

20

30

40

50

60

D e c - 0

9

A p r - 1 0

J u l - 1 0

N o v - 1

0

F e b - 1

1

M a y - 1

1

S e p - 1

1

D e c - 1

1

A p r - 1 2

J u l - 1 2

O c t - 1 2

F e b - 1

3

M a y - 1

3

S e p - 1

3

D e c - 1

3

A p r - 1 4

J u l - 1 4

('000)(₹)

Tot al Traded Q uant it y (R HS) CR ISI L F air Value

JM Financial



RESEARCH

JM Financial Ltd

15

CRISIL IER reports released on JM Financial Ltd

Date Nature of report

Fundamental

grade Fair value

Valuation

grade

CMP

(on the date of report)28-Dec-09 Initiating coverage 4/5 ₹57 5/5 ₹41

02-Feb-10 Q3FY10 result update 4/5 ₹57 5/5 ₹41

01-Jun-10 Q4FY10 result update 4/5 ₹50 5/5 ₹38

19-Aug-10 Q1FY11 result update 4/5 ₹45 5/5 ₹34

03-Nov-10 Q2FY11 result update 4/5 ₹45 4/5 ₹40

27-Jan-11 Detailed Report 4/5 ₹45 5/5 ₹22


14-Jun-11 Q4FY11 result update 4/5 ₹42 5/5 ₹24



24-Nov-11 Detailed Report 4/5 ₹36 5/5 ₹15


27-June-12 Q4FY12 result update 4/5 ₹36 5/5 ₹12



06-Dec-12 Detailed Report 4/5 ₹36 5/5 ₹18

05-Mar-13 Q3FY13 result update 4/5 ₹36 5/5 ₹16

07-June-13 Q4FY13 result update 4/5 ₹36 4/5 ₹29

10-Sep-13 Q1FY14 result update 4/5 ₹36 5/5 ₹24


21-Feb-14 Q3FY14 result update 4/5 ₹36 5/5 ₹2628-July-14 Detailed Report 4/5 ₹49 4/5 ₹41




16

Company Overview

Established in 1973, JM Financial is an integrated financial services player offering a range of

capital market products and services to corporates, HNIs and retail investors through its

subsidiaries / joint ventures / associate companies.

Organisation structure


It has a diversified product portfolio comprising IB, broking (institutional and retail), commodity

broking, portfolio management, asset management, NBFC, PE and asset reconstruction

businesses. These businesses are managed as strategic business units and organised as

separate companies headed by a team of professionals.

JM Financial Asset

Management Ltd.

JM Financial

Institutional

Securities Ltd

JM FinancialInvestment

Managers Ltd.

JM Financial

Products Ltd.

Infinite India

Investment

Management Pvt.

Ltd.

JM Financial

Properties and

Holdings Ltd.

90%53.47% 100% 100% 100% 49%

9%

91%

CR Retail Malls

(India) Ltd.

100%

100%

JM Financial

Limited

PT JM Financial

Securities

Indonesia

JM Financial

Commtrade Ltd

JM Financial

Securities, Inc.

100%

JM Financial

InsuranceBroking

Pvt. Ltd.

25%

JM Financial

Overseas Holdings

Pvt. Ltd.

100%

JM Financial

Services Ltd.

92.5%

JM Financial

Singapore Pte Ltd.

FICS Consultancy

Services Ltd.

99%



RESEARCH

JM Financial Ltd

17

Business segments


Milestones

1973 Establishment of JM Financial & Investment Consultancy Services Pvt. Ltd

1986 Ventured into stock broking and securities broking business

1997 Joint venture with Morgan Stanley to offer IB and securities broking services

2006 Launch of PE fund, JM Financial India Fund, with US-based Old Lane Partners, LP

2007 Termination of joint venture with Morgan Stanley

Acquired 60% stake in ASK Securities – specialised in institutional broking business

Launch of real estate fund

2008 Acquired the remaining 40% stake in ASK Securities; and rechristened JM Financial Institutional Securities Pvt. Ltd

2010 Strategic co-operation with Rand Merchant Bank of South Africa to offer M&A advisory services to Indian and African

corporate

2012 Expanded to international markets

Source: Company

Depository Services

Investment Banking and

Securities Business

Capital Raising

Securities Funding and Fund

Based Activities

Alternative Investment

ManagementAsset Management

M/A and Restructuring

Adv isory

Priavte Equity Ad visory

Stock Broking

IPO funding

Private Wealth

Management

Portf olio Management

Loan against

securities

Sponsor funding

Loans to developers

Asset

Reconstruction

Real Estate Fund

Private Equity Fund Mutual Fund

JM FINANCIAL




18

Annexure: Consolidated Financials


Income statement Balance Sheet

(₹ mn) FY11 FY12 FY13 FY14 FY15E (₹ mn) FY11 FY12 FY13 FY14 FY15EOperating income 8,478 8,628 10,416 10,020 12,581 Liabilities

EBITDA 4,472 4,802 6,426 6,050 7,653 Equity share capital 750 750 752 755 778

EBITDA margin 52.7% 55.7% 61.7% 60.4% 60.8% Reserves 19,173 18,794 19,855 21,216 23,214

Depreciation 124 115 122 152 270 Minorities 1,272 1,403 1,403 1,650 2,080

EBIT 4,348 4,687 6,304 5,897 7,383 Share w arrants - - - - -

Interest 2,437 2,961 3,763 3,078 3,100 Net worth 21,194 20,947 22,010 23,621 26,072

Operating PBT 1,911 1,727 2,542 2,819 4,282 Convertible debt - - - - -

Other income 473 100 (2) (13) - Other debt 32,635 32,052 42,691 29,927 35,927

Exceptional inc/(exp) (102) (1) (20) (20) - Total debt 32,635 32,052 42,691 29,927 35,927

PBT 2,283 1,826 2,519 2,785 4,282 Deferred tax liability (net) 939 971 954 906 906

Tax provision 532 595 729 784 1,242 Total liabilities 54,769 53,971 65,655 54,453 62,904

Assets

5 20 (39) (94) 431 Net f ixed assets 289 239 213 1,178 2,781

PAT (Reported) 1,746 1,212 1,829 2,096 2,610 Capital WIP 10 7 12 1,723 -

Less: Exceptionals (102) (1) (20) (20) - Total fixed assets 299 246 225 2,901 2,781 Adjusted PAT 1,847 1,213 1,849 2,116 2,610 Investments 8,554 5,571 5,590 4,801 4,801

Current assets

Inventory (securities held as stock in trad 12,536 7,597 5,978 5,342 7,238

Sundry debtors 1,115 1,579 2,253 2,292 2,846

Loans and advances 24,233 27,296 40,576 32,695 46,549

Ratios Cash & bank balance 10,751 13,362 14,185 9,791 2,964

FY11 FY12 FY13 FY14 FY15E Marketable securities 283 465 99 99 99

Growth Total current assets 48,918 50,299 63,090 50,219 59,695

Operating income (%) 47.4 1.8 20.7 (3.8) 25.6 Total current liabilities 4,710 2,951 4,051 4,568 5,473

EBITDA (%) 113.2 7.4 33.8 (5.9) 26.5 Net current assets 44,208 47,349 59,039 45,651 54,223

Adj PAT (%) 66.8 -34.4 52.5 14.4 23.3 Intangible s/Mis c. e xpe nditure 1,708 806 801 1,100 1,100

Adj EPS (%) 66.8 -34.4 52.1 13.9 19.7 Total assets 54,769 53,971 65,655 54,453 62,904

Profitability Cash flow

EBITDA margin (%) 52.7 55.7 61.7 60.4 60.8 (₹ mn) FY11 FY12 FY13 FY14 FY15E

Adj PAT Margin (%) 20.6 14.0 17.6 20.9 20.7 Pre-tax prof it 2,384 1,827 2,539 2,806 4,282

RoE (%) 8.5 5.8 8.5 9.2 10.5 Total tax paid (580) (563) (747) (832) (1,242)

RoCE (%) 9.4 8.8 10.7 10.0 12.8 Depreciation 124 115 122 152 270

RoIC (%) 15.1 12.5 14.1 12.1 13.2 Working capital changes (10,691) (347) ( 11,235) 8,994 (15,398)

Net cash from operations (8,762) 1,032 (9,321) 11,120 (12,087)

Valuations Cash from investments

Price-earnings (x) 16.7 24.1 16.0 14.1 11.6 Capital expenditure (179) 841 (96) (3,128) (150)

Price-book (x) 1.4 1.4 1.3 1.2 1.2 Investments and others 1,122 2,800 348 789 -

EV/EBITDA (x) 11.7 10.2 9.2 8.5 8.5 Net cash from investments 943 3,641 252 (2,339) (150)

EV/Sales (x) 6.6 6.0 6.2 5.5 5.4 Cash from financing

Div idend payout ratio (%) 24.4 37.1 36.7 21.3 33.6 Equity raised/(repaid) - (440) 55 88 438

Dividend yield (%) 1.5 1.5 2.3 1.5 2.9 Debt raised/(repaid) 14,215 (583) 10,639 ( 12,765) 6,000

Dividend (incl. tax) (524) (524) (837) (586) (1,027)

B/S ratios Others (incl extraordinaries) (75) (517) 15 67 -

Current ratio (x) 10.4 17.0 15.6 11.0 10.9 Net cash from financing 13,615 (2,063) 9,871 ( 13,196) 5,411

Debt-equity (x) 1.5 1.5 1.9 1.3 1.4 Change in cash position 5,898 2,611 823 (4,394) (6,827)

Net debt/equity (x) 1.0 0.9 1.3 0.8 1.3 Closing cash 10,751 13,362 14,185 9,791 2,964

Interest coverage 1.8 1.6 1.7 1.9 2.4

Quarterly financials

(₹ mn) Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14

Total operating income 2,783 2,819 2,477 2,219 2,551

Change (q-o-q) 3.7% 1.3% -12.1% -10.4% 14.9%

EBITDA 1,789 1,807 1,483 1,328 1,413

Per share Change (q-o-q) 9.6% 1.0% -17.9% -10.4% 6.4%

FY11 FY12 FY13 FY14 FY15E EBITDA margin 64.3% 64.1% 59.9% 59.9% 55.4%

Adj EPS (₹) 2.5 1.6 2.5 2.8 3.4 Reported PAT 569 558 492 433 519

CEPS 2.5 1.8 2.6 3.0 3.7 Adj PAT 698 555 504 442 594

Book value 28.3 27.9 29.3 31.3 33.5 Change (q-o-q) 58.0% -20.5% -9.2% -12.4% 34.5%

Dividend (₹) 0.6 0.6 0.9 0.6 1.1 Adj PAT margin 25.1% 19.7% 20.4% 19.9% 23.3%

Actual o/s shares (mn) 749.7 749.9 751.6 755.3 778.3 Adj EPS 0.9 0.7 0.7 0.6 0.8

Minority interest/Share of

profit from associates



RESEARCH

JM Financial Ltd

19

Focus ChartsGrowth in equity turnover moderated over the past few years ARC AUM witnessed strong growth in FY14

Source: NSE, BSE, CRISIL Research Source: Industry, CRISIL Research

Revenues expected to grow at 26% CAGR by FY15 PAT and PAT margin trend


RoE lower because of high proportion of liquid funds Share price movement

-Indexed to 100


37 4272 103 185

149232 339 356 420 509

172%

13%

71%

43%

79%

-19%

56%46%

5%18% 21%

-50%

0%

50%

100%

150%

200%

0

100

200

300

400

500

600

F

Y 0 4

F

Y 0 5

F

Y 0 6

F

Y 0 7

F

Y 0 8

F

Y 0 9

F

Y 1 0

F

Y 1 1

F

Y 1 2

F

Y 1 3

F

Y 1 4

(₹ tn)

Equity turnover (BSE + NSE) Growth y-o-y (RHS)

6.0 7.610.8

36.5

1.8 2.13.4

5.8

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY11 FY12 FY13 FY14

(₹ bn)

ARC AUM JM's share

8,478 8,628 10,416 10,020 12,581

47%

2%

21%

-4%

26%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000


(₹ mn)

Revenues Growth y-o-y (RHS)

1,847 1,213 1,849 2,116 2,610

21%

14%18%

21% 21%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

2,750


(₹ mn)

Adj PAT PAT margin (RHS)

8.5

5.8

8.59.2

10.5

9.48.8

10.7

10.0

12.8

0

2

4

6

8

10

12

14


(%)

ROE (%) ROCE (%)

0

50

100

150

200

250

300

350

F e b - 0

9

M a y - 0

9

S e p - 0

9

D e c - 0

9

A p r - 1 0

J u l - 1 0

N o v - 1

0

M a r - 1 1

J u n - 1

1

O c t - 1 1

J a n - 1

2

M a y - 1

2

A u g - 1

2

D e c - 1

2

M a r - 1 3

J u l - 1 3

O c t - 1 3

F e b - 1

4

J u n - 1

4

JM Financial CNX 500




20

CRISIL Research Team

President

Mukesh Agarwal CRISIL Research +91 22 3342 3035 [email protected]

Analytical Contacts

Sandeep Sabharwal Senior Director, Capital Markets +91 22 4097 8052 [email protected]

Prasad Koparkar Senior Director, Industry & Customised Research +91 22 3342 3137 [email protected]

Binaifer Jehani Director, Customised Research +91 22 3342 4091 [email protected]

Manoj Mohta Director, Customised Research +91 22 3342 3554 [email protected]

Sudhir Nair Director, Customised Research +91 22 3342 3526 [email protected]

Mohit Modi Director, Equity Research +91 22 4254 2860 [email protected]

Jiju Vidyadharan Director, Funds & Fixed Income Research +91 22 3342 8091 [email protected]

Ajay D'Souza Director, Industry Research +91 22 3342 3567 [email protected]

Ajay Srinivasan Director, Industry Research +91 22 3342 3530 [email protected]

Rahul Prithiani Director, Industry Research +91 22 3342 3574 [email protected]

Business DevelopmentHani Jalan Director, Capital Markets +91 22 3342 3077 [email protected]

Prosenjit Ghosh Director, Industry & Customised Research +91 22 3342 8008 [email protected]

Business Development – Equity Research

Vikram Thirani – Associate Director

Email : [email protected]

Phone : +91 9820199188

Amit Khare – Regional Manager


Phone : +91 9769869996

Ankur Nehra – Regional Manager


Phone : +91 9999575639

Priyanka Murarka – Regional Manager


Phone : +91 9903060685



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▪

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CRISIL Research Ier Report Jm Financial 2014

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