Q1 2027 JM Financial Ltd Earnings Call

August 4, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the earnings conference call for JM Financial Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day and welcome to the earnings conference call for JM Financial Limited. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Kindly note that any forward-looking statements made on this call are based on the management's current expectations. However, the actual results may vary significantly, and therefore the accuracy and completeness of this expectation cannot be guaranteed. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Kampani. Thank you, and over to you, sir.

Operator: Ladies and gentlemen, good day and welcome to the Earnings Conference Call for JM Financial Limited. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Kindly note that any forward-looking statements made on this call are based on the management's current expectations. However, the actual results may vary significantly, and therefore the accuracy and completeness of this expectation cannot be guaranteed. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Kampani. Thank you, and over to you, Sir.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Kindly note that any forward-looking statements made on this call are based on management's current expectations.

Speaker #1: However, the actual results may vary significantly, and therefore the accuracy and completeness of this expectation cannot be guaranteed. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Vishal Kampani. Thank you, and over to you, sir.

Speaker #2: Thank you. On behalf of JM Financial, we extend a very warm welcome to all of you to our earnings conference call to discuss our financial results for the quarter ended June 2026.

Vishal Kampani: Thank you. On behalf of JM Financial, we extend a very warm welcome to all of you to our earnings conference call to discuss our financial results for the quarter ended June 2026. You would have seen our results presentation press release on the stock exchanges and the website. I hope you've had a chance to go through the same. On the call, we also have Sonia, MD & CEO of Investment Banking, Anuj, head of our Private Wealth, Manish, MD & CEO of our Home Loans business, and Nishita, Group CFO. I will give the key updates and hand over to Nishit, who will take you all through the numbers. Q1 results demonstrate the strength of our diversified business model. I'm pleased to report that the private markets segment provided very strong cushion to the earnings amidst volatility in capital markets.

Speaker #2: You would have seen our results presentation that's released on the stock exchanges and the website. I hope you've had a chance to go through the same.

Speaker #2: On the call, we also have Sonia, MD and CEO of Investment Banking; Anuj, Head of our Private Wealth; Manish, MD and CEO of our Home Loans Business; and Nishita, Group CFO.

Speaker #2: I will give the key updates and hand over to Nishit, who will take you all through the numbers. Q1 results demonstrate the strength of our diversified business model, and I am pleased to report that the private market segment provided a very strong cushion to the earnings amidst volatility in capital markets.

Vishal Kampani: I'm pleased to report that the private markets segment provided very strong cushion to the earnings amidst volatility in capital markets. We have always maintained that private markets business can be a strong counter-cyclical force to the volatility in capital markets. Our Q1 results validate the same. Net revenue for us increased 13% YOY to INR 883 crores. Pre-provision operating profit increased by 21% year on year to INR 469 crores. PAT ex-provision before minorities increased by 24% YOY to INR 379 crores. In private markets, we witnessed one of the best quarters for our ARC business, with very strong resolutions in distressed credit assets during the quarter, where we collected over INR 2,000 crores. The group share of that cash flow was over INR 1,200 crores.

Speaker #2: We have always maintained that our private markets business can be a strong counter-cyclical force to the volatility in capital markets, and our Q1 results validate the same.

Vishal Kampani: We have always maintained that private markets business can be a strong counter-cyclical force to the volatility in capital markets. Our Q1 results validate the same. Net revenue for us increased 13% YOY to INR 883 crores. Pre-provision operating profit increased by 21% year on year to INR 469 crores. PAT ex-provision before minorities increased by 24% YOY to INR 379 crores. In private markets, we witnessed one of the best quarters for our ARC business, with very strong resolutions in distressed credit assets during the quarter, where we collected over INR 2,000 crores. The group share of that cash flow was over INR 1,200 crores. Corporate advisory and capital markets had a slow quarter, primarily because of lack of IPO issuance and primary market activity.

Speaker #2: Net revenue for us increased 13% year over year to ₹883 crores. Pre-provision operating profit increased by 21% year over year to ₹469 crores, and PAT, ex-provisions before minorities, increased by 24% year over year to ₹379 crores.

Speaker #2: In private markets, we witnessed one of the best quarters for our ARC business, with very strong resolutions in the stressed credit assets during the quarter, where we collected over ₹2,000 crore, and the group share of that cash flow was over ₹1,200 crore.

Speaker #2: Corporate advisory and capital markets had a slow quarter, primarily because of lack of IPO issuance and primary market activity. However, our pipeline of transactions is extremely strong, with almost ₹220,000 crore of pipeline on the IPO front.

Vishal Kampani: Corporate advisory and capital markets had a slow quarter, primarily because of lack of IPO issuance and primary market activity. However, our pipeline of transactions extremely strong, with almost INR 2,20,000 crore of pipeline on the IPO front. The INR 2,20,000 crore number includes filings with NSE as well as Jio. Even if you were to exclude those two large IPOs, we've seen a decent growth and the pipeline is at INR 1,50,000 crore. We are witnessing early signs of recovery in capital markets, which will help us execute, hopefully, majority of our pipeline in the rest of the year. The month of July, our revenues on the transaction side in corporate advisory and capital markets for the month of July already exceed what we have done in June, which is a very positive sign.

Vishal Kampani: However, our pipeline of transactions extremely strong, with almost INR 2,20,000 crore of pipeline on the IPO front. The INR 2,20,000 crore number includes filings with NSE as well as Jio. Even if you were to exclude those two large IPOs, we've seen a decent growth and the pipeline is at INR 1,50,000 crore. We are witnessing early signs of recovery in capital markets, which will help us execute, hopefully, majority of our pipeline in the rest of the year. The month of July, our revenues on the transaction side in corporate advisory and capital markets for the month of July already exceed what we have done in June, which is a very positive sign. We've also seen the reversal of FPI flows, to becoming net buyers from being net sellers.

Speaker #2: The ₹2,20,000 crore number includes filings of NSC as well as GO. Even if you were to exclude those two large IPOs, we've seen a decent growth in the pipeline, which is at ₹1,50,000 crores.

Speaker #2: We are witnessing early signs of recovery in capital markets, which will help us execute, hopefully, the majority of our pipeline in the rest of the year.

Speaker #2: In the month of July, our revenues on the transaction side in corporate advisory and capital markets already exceed what we had done in June, which is a very, very positive sign. We've also seen a reversal of FPI flows, with FPIs becoming net buyers from being net sellers.

Vishal Kampani: We've also seen the reversal of FPI flows, to becoming net buyers from being net sellers. If that trend were to continue or even remain stable, we are hopeful that we should be able to pull through with a significant amount of our pipeline. In wealth management, performance was a little subdued because of weak transactional business, which is related to the markets and also the primary market issuance, but the recurring AUM and loans have shown good traction. In asset management, we are increasing bouquet of mutual fund products and recently launched JM Multi Asset Allocation Fund. On the AIF front, we launched our JM Pre-IPO Fund as well as our JM Credit Fund. We're expecting very good numbers in most of these funds. We continue to invest in the asset management business.

Speaker #2: And if that trend were to continue or even remain stable, we are hopeful that we should be able to pull through with a significant amount of our pipeline.

Vishal Kampani: If that trend were to continue or even remain stable, we are hopeful that we should be able to pull through with a significant amount of our pipeline. In wealth management, performance was a little subdued because of weak transactional business, which is related to the markets and also the primary market issuance, but the recurring AUM and loans have shown good traction. In asset management, we are increasing bouquet of mutual fund products and recently launched JM Multi Asset Allocation Fund. On the AIF front, we launched our JM Pre-IPO Fund as well as our JM Credit Fund. We're expecting very good numbers in most of these funds. We continue to invest in the asset management business. We have outlined INR 150 crore investment further into asset management over the next two years.

Speaker #2: In wealth management, performance was a little subdued because of weak transactional business, which is related to the markets and also the primary market issuance. However, the recurring AUM and loans have shown good traction.

Speaker #2: In asset management, we're increasing the bouquet of mutual fund products, and recently launched the JM Multi-Asset Allocation Fund. On the AI front, we launched the JM3 IPO Fund as well as the JM Credit Fund.

Speaker #2: We're expecting very good numbers in most of these funds, and we continue to invest in the asset management business. We have outlined a ₹150 crore investment further into asset management over the next two years.

Vishal Kampani: We have outlined INR 150 crore investment further into asset management over the next two years. On affordable housing business, it reported a strong YOY growth in disbursements of 87% and a 28% YOY growth in AUM. That business is now on a solid footing. Again, we focus on listing that separately, in a span of two to three years. With this brief update, I'm handing over the call to Nishit to take you through the financials in detail.

Speaker #2: On the affordable housing business, it's reported a strong year-over-year growth in disbursements of 87%, and a 28% year-over-year growth in AUM. That business is now on a solid footing.

Vishal Kampani: On affordable housing business, it reported a strong YOY growth in disbursements of 87% and a 28% YOY growth in AUM. That business is now on a solid footing. Again, we focus on listing that separately, in a span of two to three years. With this brief update, I'm handing over the call to Nishit to take you through the financials in detail.

Speaker #2: And again, we focus on listing that separately in a span of two to three years. With this brief update, I'm handing over the call to Nishit to take you through the financials in detail.

Speaker #3: Thank you, Vishal. On the financial numbers for Q1 FY27, net revenue increased by 13% year-on-year to ₹883 crore, and pre-provision operating profit increased by 21%.

Nishit Shah: Thank you, Vishal. On the financial numbers for Q1 FY27, net revenue increased by 13% year-on-year to INR 883 crore, pre-provision operating profit increased by 21%. Profit after tax provision before minority interest increased by 24% to INR 379 crore. Profit after tax provision, and after minorities stood flat at INR 302 crore for the quarter. Reported profit after tax after minority was INR 292 crore, resulting in an annualized ROE at approximately 11%. The consolidated net worth, excluding minority interest, stood at INR 10,900 crore, translating to a book value of approximately INR 140 per share. The leverage is one time. On to the business segments.

Speaker #3: Profit after tax, net of provision and before minority interest, increased by 24% to ₹379 crore. Profit after tax, excluding provision and after minorities, stood flat at ₹302 crore for the quarter.

Speaker #3: Reported profit after tax after minority was ₹292 crores, resulting in an annualized ROE of approximately 11%. The consolidated net worth, excluding minority interest, stood at ₹10,900 crores, translating to a book value of approximately ₹140 per share.

Speaker #3: The leverage is one time. Moving on to the business segments.

Speaker #1: Ladies and gentlemen, we have the management line disconnected. Please stay connected while we reconnect the management. Ladies and gentlemen, we have the management line reconnected.

Operator 2: Ladies and gentlemen, we have the management line disconnected. Please stay connected while we reconnect the management. Ladies and gentlemen, we have the management line reconnected. Sir, you may please proceed.

Operator: Ladies and gentlemen, we have the management line disconnected. Please stay connected while we reconnect the management. Ladies and gentlemen, we have the management line reconnected. Sir, you may please proceed.

Speaker #1: Sir, you may please proceed.

Speaker #2: Yeah, I'll just repeat

Nishit Shah: I'll just repeat for the benefit of everyone. For Q1 FY27, net revenue increased by 13% YOY to INR 883 crores, and pre-provision operating profit increased by 21%. Profit after tax provision before minority interest increased by 24% to INR 379 crores. Profit after tax provision after minority stood flat at INR 302 crores. Reported PAT for the quarter stood at INR 292 crores, resulting in an annualized ROE of approximately 11%. The consolidated net worth stood at INR 10,900 crores, translating to a book value of approximately INR 114 per share. The leverage is one time. On to the business segments, corporate advisory and capital markets. This includes the investment banking and the institutional equities business. We closed nine capital market transactions aggregating to approximately INR 22,000 crores in Q1 FY27.

Speaker #3: For the benefit of everyone, for Q1 FY27, net revenue increased by 13% year-over-year to ₹883 crore, and pre-provision operating profit increased by 21%.

Speaker #3: Profit after tax ex-provision before minority interest increased by 24% to ₹379 crore, and profit after tax ex-provision after minorities stood flat at ₹302 crore.

Speaker #3: Reported PAT for the quarter stood at ₹292 crore, resulting in an annualized ROE of approximately 11%. The consolidated net worth stood at ₹10,900 crore, translating to a book value of approximately ₹114 per share.

Speaker #3: The leverage is one time. On to the business segments: corporate advisory and capital markets. This includes the investment banking and the institutional equities business. We closed nine capital market transactions, aggregating to approximately ₹22,000 crore in Q1 FY27.

Speaker #3: In addition, we have filed documents for 60 IPOs, aggregating to an issue size of approximately ₹150,000 crore, and the pipeline of transactions is increasing.

Nishit Shah: In addition, we have filed documents for 60 IPOs aggregating to an issue size of approximately INR 150,000 crores. The pipeline of transactions is increasing. The said pipeline does not include IPO transactions of Jio Platforms Limited and National Stock Exchange. For Q1 FY27, net revenue for the segment stood at INR 115 crores as against INR 182 crores. PAT stood at INR 32 crores. The performance for the quarter was impacted by lack of primary issuances. Wealth and asset management. On wealth management, our sales and RMs stand with over 1,000 professionals with 71 branches and approximately 870 franchisees. Wealth loan book grew by 43% year-on-year to INR 2,417 crores, and recurring AUM of our wealth business grew to approximately INR 33,400 crores. The proportion of recurring to total AUM has now increased to 30%.

Speaker #3: The set pipeline does not include IPO transactions of GO Platforms Limited and National Stock Exchange. For Q1 FY27, net revenue for the segment stood at ₹115 crore as against ₹182 crore, and PAT stood at ₹32 crore.

Speaker #3: The performance for the quarter was impacted by a lack of primary issuances. Wealth and asset management—on wealth management, our sales and RM span over 1,000 professionals, with 71 branches and approximately 870 franchisees.

Speaker #3: Wealth loan book grew by 43% year-on-year to ₹2,417 crore, and recurring AUM of our wealth business grew to approximately ₹33,400 crore.

Speaker #3: The proportion of recurring to total AUM has now increased to 30%. On a year-over-year basis, net revenue stood at ₹185 crore as against ₹211 crore, and PAT stood at ₹19 crore.

Nishit Shah: On a YOY basis, net revenue stood at INR 185 crores as against INR 211 crores. PAT stood at INR 19 crores. The performance for the quarter was impacted by slow transaction business. In the mutual fund space, the closing AUM from non-liquid funds showed signs of recovery and stood at approximately INR 10,900 crores, up 16% on a quarter-on-quarter basis. The employee strength in the asset management business has increased by 10% year-on-year to 222 employees. For our asset management business, management fees from mutual funds for Q1 increased by 62% to INR 13 crores. Loss after minority interest was flat at INR 5 crores. Private markets. This business comprises of private credit, that is corporate bespoke real estate and distressed credit and investments which include private equity funds, REITs, AIFs, et cetera. Private markets is a very unique platform with a focus on providing differentiated solutions to our clients.

Speaker #3: The performance for the quarter was impacted by slow transaction business. In the mutual fund space, the closing AUM from non-liquid funds showed signs of recovery and stood at approximately ₹10,900 crores, up 16% on a quarter-on-quarter basis.

Speaker #3: The employee spend in the asset management business has increased by 10% year on year to 222 employees. For our asset management business, management fees from mutual funds for Q1 increased by 62% to ₹13 crore.

Speaker #3: Loss after minority interest was flat at ₹5 crore. Private markets: this business comprises private credit, that is, corporate bespoke, real estate and distressed credit, and investments which include private equity funds, REITs, AIFs, etc.

Speaker #3: Private Markets is a very unique platform with a focus on providing differentiated solutions to our clients. Private Markets witnessed significant recoveries in distressed credit assets; gross resolutions were over ₹2,000 crore, of which group share of cash flows was over ₹1,200 crore.

Nishit Shah: Private markets is a very unique platform with a focus on providing differentiated solutions to our clients. Private markets witnessed significant recoveries in distressed credit assets. Gross resolutions were over INR 2,000 crores, of which group share of cash flows was over INR 1,200 crores. Net revenue for Q1 FY27 doubled to INR 462 crores and pre-provision operating profit grew almost 2.3 times to INR 375 crores. The segment profit after minority interest stood at INR 228 crores for Q1 FY27. Affordable home loans. This business includes our home loans business focused on the affordable segment. We have a branch network of 151 branches and a customer base of close to 36,000. AUM increased by 28% year-on-year to INR 3,715 crores.

Nishit Shah: Private markets witnessed significant recoveries in distressed credit assets. Gross resolutions were over INR 2,000 crores, of which group share of cash flows was over INR 1,200 crores. Net revenue for Q1 FY27 doubled to INR 462 crores and pre-provision operating profit grew almost 2.3 times to INR 375 crores. The segment profit after minority interest stood at INR 228 crores for Q1 FY27. Affordable home loans. This business includes our home loans business focused on the affordable segment. We have a branch network of 151 branches and a customer base of close to 36,000. AUM increased by 28% year-on-year to INR 3,715 crores. For Q1 FY27, revenue increased by 22% YOY to INR 123 crores, and profit after PAT and minority interest grew by 16% year-on-year to INR 17 crores.

Speaker #3: Net revenue for quarter one FY27 doubled to ₹462 crore, and pre-provision operating profit grew almost 2.3 times to ₹375 crore. The segment profit after minority interest stood at ₹228 crore for Q1 FY27.

Speaker #3: Affordable home loans. This business includes our home loans business focused on the affordable segment. We have a branch network of 151 branches and a customer base of close to 36,000.

Speaker #3: AUM increased by 28% year on year to ₹3,715 crore. For Q1 FY27, revenue increased by 22% year on year to ₹123 crore, and profit after tax and minority interest grew by 16% year on year to ₹17 crore.

Nishit Shah: For Q1 FY27, revenue increased by 22% YOY to INR 123 crores, and profit after PAT and minority interest grew by 16% year-on-year to INR 17 crores. With this brief update, I would like to hand over the call to the moderator and open the floor for questions.

Speaker #3: With this brief update, I would like to hand over the call to the moderator and open the floor for questions.

Nishit Shah: With this brief update, I would like to hand over the call to the moderator and open the floor for questions.

Speaker #1: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone.

Operator 2: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Digant Arya from GreenEdge Wealth. Please go ahead.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Digant Arya from GreenEdge Wealth. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Tikanth Arya from GreenEdge Wealth.

Speaker #1: Please go ahead.

Speaker #3: Yeah, hi. Thank you for the opportunity. My question is, you know, on the cyclicality that we see. See, this quarter, you know, IPO transactions were weak.

Digant Arya: Hi. Thank you for the opportunity. My question is on the cyclicality that we see. See, this quarter, IPO transactions were weak, the corporate advisory capital markets division not doing well is kind of expected. We see a very similar kind of weakness flowing in the wealth business and even the private credit where the loan growth, the buildup has still not started. Vishal, if you can just say that how does this cyclicality break and what timeline should we think about in terms of wealth scaling up on its own without a lot of transactions in the corporate advisory business and when does private credit also pick up? I see recoveries are there, but when does that organic growth start?

Speaker #3: So, you know, the Corporate Advisory and Capital Markets division not doing well is kind of expected. But, you know, we see a very similar kind of weakness flowing into the wealth business.

Speaker #3: And even the private credit where, you know, the loan book the loan growth, you know, continues to, you know, the buildup has still not started.

Speaker #3: So, Vishal, if you can just say that, you know, how does this cyclicality break and, you know, like what timelines should we think about, you know, in terms of wealth scaling up on its own without, you know, a lot of transactions in the corporate advisory business?

Speaker #3: And, you know, when does private credit also pick up? Like, I see recoveries are there, but, you know, when does that organic growth start?

Speaker #2: Yeah. So, let me address the private credit question first. If you see just page 13 of our investor presentation, I think the bespoke book that we have, which includes loan against shares as well as the work we do on our corporate, is at a five-quarter high.

Nishit Shah: Yeah. Let me address the private credit question first. If you see this page 13 on our investor presentation, I think, the bespoke book that we have, which includes loan against shares as well as the work we do on a corporate is on a five-quarter high. In fact, if you see it went down to almost INR 2,700 crores and right now is at INR 3,000 crores. What we had guided at the end of Q4 was this book should see at least a 15% to 20% growth YOY. I think we've almost done half of that growth in the Q1. We are hoping that that trajectory will continue. I think the growth has already started and this is without a lot of syndication.

Vishal Kampani: Yeah. Let me address the private credit question first. If you see this page 13 on our investor presentation, I think, the bespoke book that we have, which includes loan against shares as well as the work we do on a corporate is on a five-quarter high. In fact, if you see it went down to almost INR 2,700 crores and right now is at INR 3,000 crores. What we had guided at the end of Q4 was this book should see at least a 15% to 20% growth YOY. I think we've almost done half of that growth in the Q1. We are hoping that that trajectory will continue. I think the growth has already started and this is without a lot of syndication.

Speaker #2: In fact, if you see, it went down to almost ₹2,700 crore, and right now it is at ₹3,000 crore. So, what we had guided at the end of Q4 was this book should see at least a 15 to 20 percent growth year-over-year.

Speaker #2: So, I think we've already achieved almost half of that growth in the first quarter. We're hoping that this trajectory will continue. So, I think the growth has already started.

Speaker #2: And this is, you know, without a lot of syndication. There's more syndication to happen, and that itself will, you know, grow the book 15–20 percent quite comfortably till the end of the year.

Nishit Shah: There's more syndication to happen and that itself will grow the book 15% to 20% quite comfortably till the end of the year. You are seeing the overall book being flattish because it's just a real estate book which is de-growing as well as the non-core book which obviously will keep de-growing. The idea is just to focus on bespoke where the growth is coming and at some point in time when we get comfortable on the risk-adjusted returns for real estate, as I mentioned earlier as well on my calls, we will start lending in real estate. We are still not sure whether the time is right. The growth in private markets on the credit side has already started and even on the ARC front we are seeing some very interesting transactions. We were able to do our largest transaction even last quarter.

Vishal Kampani: There's more syndication to happen and that itself will grow the book 15% to 20% quite comfortably till the end of the year. You are seeing the overall book being flattish because it's just a real estate book which is de-growing as well as the non-core book which obviously will keep de-growing. The idea is just to focus on bespoke where the growth is coming and at some point in time when we get comfortable on the risk-adjusted returns for real estate, as I mentioned earlier as well on my calls, we will start lending in real estate. We are still not sure whether the time is right. The growth in private markets on the credit side has already started and even on the ARC front we are seeing some very interesting transactions.

Speaker #2: You are seeing the overall book being flat-ish because it's just the real estate book, which is de-growing, as well as the non-core book, which obviously will keep de-growing.

Speaker #2: So, the idea is just to focus on bespoke, with growth coming, and at some point in time, when we get comfortable on the risk-adjusted returns for real estate—as I mentioned earlier as well on my calls—we will start lending in real estate.

Speaker #2: We are still not sure whether the time is right. The growth in private markets and on the credit side has already started. Even on the ARC front, we are seeing some very interesting transactions.

Speaker #2: We were able to do our largest transaction even last quarter, and, you know, it's a very interesting time where we are seeing some retail assets where there are decent returns, which we are able to close and do, you know, some transactions.

Vishal Kampani: We were able to do our largest transaction even last quarter. It's a very interesting time where we are seeing some retail assets where there are decent returns which we are able to close and do some transactions and there'll be some syndication that may happen on the ARC side as well. ARC, as you know, Digant, the recovery resolution is a lumpy business. Obviously we've seen a phenomenal quarter in Q2. I think even the next few quarters this year should be pretty decent from an ARC perspective. All in all, I think private markets is in good shape, and we should be able to meet our guidance in the private markets side.

Nishit Shah: It's a very interesting time where we are seeing some retail assets where there are decent returns which we are able to close and do some transactions and there'll be some syndication that may happen on the ARC side as well. ARC, as you know, Digant, the recovery resolution is a lumpy business. Obviously we've seen a phenomenal quarter in Q2. I think even the next few quarters this year should be pretty decent from an ARC perspective. All in all, I think private markets is in good shape, and we should be able to meet our guidance in the private markets side. On the wealth side, as I've maintained that the investments have all been made. Teams are in place. This year is a focus in terms of productivity. There is a good sort of feedback on the client side. We are adding clients.

Speaker #2: And there'll be some syndication that may happen on the ARC side as well. And, you know, ARC, as you know, Diganth, is—the recovery resolution is a lumpy business.

Speaker #2: Obviously, we've seen a phenomenal June quarter. But I think even the next few quarters this year should be pretty decent from an ARC perspective.

Speaker #2: So, all in all, I think private markets are in good shape, and we should be able to meet our guidance on the private market side.

Speaker #2: On the wealth side, as I've maintained, the investments have all been made and teams are in place. This year, the focus is on productivity.

Nishit Shah: On the wealth side, as I've maintained that the investments have all been made. Teams are in place. This year is a focus in terms of productivity. There is a good sort of feedback on the client side. We are adding clients. Our recurring AUM is growing. Of course we are a transactional heavy firm and last year as well as last to last year, there were a lot of transactions done

Speaker #2: There is a good sort of, you know, feedback on the client side. We are adding clients. Our recurring AUM is growing. But, of course, we are a transaction-heavy firm, and last year as well as the year before, there were a lot of transactions done on the private side.

Nishit Shah: Our recurring AUM is growing. Of course we are a transactional heavy firm and last year as well as last to last year, there were a lot of transactions done

Vishal Kampani: On the private side. That transaction activity on the private side, which as a market participant you will know, has not been as encouraging in the last six months. It's really a drop on that front. It doesn't take away anything from the business that we are building. Even in terms of the wealth broking accounts that we've been able to open, the number of loans we've been able to grow on the margin side and the LAS side for most of these customers has been very encouraging. I think it's just about continuing to focus on the execution and fairly confident at some point in time we'll see very encouraging sort of stats and numbers on the wealth business, as I said. You asked me for a timeline. I've always maintained that it's a two to three-year build-out.

Speaker #2: And that transaction activity on the private side, which, as a market participant you will know, has not been as encouraging in the last six months.

Speaker #2: So, it's really a drop on that front. It doesn't take away anything from the business that we are building. Even in terms of the wealth broking accounts that we've been able to open, the number of loans we've been able to grow on the margin side in the last cycle for most of these customers has been very, very encouraging.

Speaker #2: So, I think it's just about continuing to focus on the execution, and I'm fairly confident that at some point in time, we'll see very, very encouraging sorts of stats and numbers on the wealth business, as said.

Speaker #2: I mean, you asked me for a timeline. I've always maintained that it's a two- to three-year build-out. The recruitment phase was sort of completed in the last 18 months to two years, and hopefully this year and next year are the times where we should see good returns from that business.

Vishal Kampani: The recruitment phase is sort of completed last 18 months to 2 years. Hopefully this year and next year is the time where we should see good sort of returns from the business. Anything you want to add to the same, Anuj? Please go ahead. It's all covered?

Speaker #2: Anything you want to add to the same, Anush? Please go ahead, or is it all covered?

Speaker #3: Yeah. No, I think, as Vishal mentioned, the recurring AUM is building up very well. We are focusing on increasing the share of our recurring business in the overall AUM and revenues.

Anuj Kapoor: No, I think, as Vishal mentioned, the recurring AUM is building up very well. We are focusing on increasing the share of our recurring business in the overall AUM and revenues. As Vishal mentioned, the build-out has happened. We've penetrated into 21 cities into India, built out offshore as well. Really the focus is on productivity and enhancing that, especially for the new relationship managers we've hired over the last 12 to 18 months.

Speaker #3: And as Vishal mentioned, the build-out has happened. We've penetrated into 21 cities in India and built out offshore as well. So, really, the focus is on productivity and enhancing that, especially for the new relationship managers we've hired over the last 12 to 18 months.

Speaker #1: Oh, okay. Okay, thanks. Thanks for these details. Second question is that this quarter was very good for, you know, ARC recoveries and as you know, as Vishal, as you said, it's a lumpy business.

Digant Arya: Okay. Thanks for these details. Second question is that this quarter was very good for ARC recoveries and, Vishal, as you said, it's a lumpy business. Maybe this quarter saw very good recovery. If you can just give some color on what happened and what more to expect. That will be useful because this is a pretty heavy quarter on the bank division.

Speaker #1: So, maybe this quarter saw very good recoveries. You can just give some color on, you know, like, you know, what happened and, you know, what more to expect.

Speaker #1: That will be useful because this is a pretty heavy quarter for that division.

Speaker #2: Yeah. So, Diganth, most of the resolutions that we have done in the ARC last quarter have all been from the new book.

Vishal Kampani: Yeah. Viran, most of the resolutions which we have done in the ARC last quarter have all been from the new book. When I say new book, it is all the new underwriting that has happened post-COVID. In fact, largely in 2023, 2024 and 2025. The returns have been fairly decent. I think our overall IRRs have been 18%+ in all of those transactions. We have completely moved away, as you know, from taking any sort of turnaround risk ourselves in the ARC. These are all well-structured transactions where we share significant portion of the upside with the originator of the deal. I think it is all in all looking good. As I said, we have deployed a bit also last quarter at the ARC level. We expect returns to be similar in that space.

Speaker #2: When I say 'new book,' it's all the new underwriting that has happened post-COVID. In fact, largely in 2023, '24, and '25. And the returns have been fairly decent.

Speaker #2: I think our overall IRRs have been 18 percent plus. In all of those transactions, we have completely moved away, as you know, from taking any sort of turnaround risk ourselves in the ARC.

Speaker #2: So, these are all well-structured transactions where, you know, we share a significant portion of the upside with the sort of originator of the deal. So, I think it's all in all looking good.

Speaker #2: As I said, we've deployed a bit also last quarter. At the ARC level, and we expect returns to be similar in that space. So, ARC wholesale returns are around 18 to 22 percent.

Vishal Kampani: ARC wholesale returns are around 18% to 22%, and at the retail asset levels, the returns are around 15% to 18%. All in all, on average, we are able to clock anywhere between 16% to 18%. That should continue. We also have two or three large resolutions, which are still pending from the pre-COVID book. There has been a lot of encouraging sort of movement on all of those in the last one year as well. I talked a bit about it in the last call that I think this year we will see very good cash flow and recovery from the ARC, and it is already visible in terms of Q1, and I think there will be some more, fingers crossed, over the next nine months as well.

Speaker #2: And at the retail asset levels, the returns are around 15% to 18%. So, all in all, on average, we're able to clock anywhere between 16% to 18%.

Speaker #2: So, that will that should continue. We also have you know, two or three large resolutions which are still pending from the pre-COVID book. And there has been a lot of encouraging sort of movement on all of those in the last one year as well.

Speaker #2: And I talked a bit about it in the last call that, I mean, this year we'll see very good cash flow and recovery from the ARC, and it's already visible in terms of Q1.

Speaker #2: And I think there will be some more fingers crossed over the next nine months as well.

Speaker #1: And this doesn't include any of the write-backs that we expect on the provisions we've made on our real estate book, so there is not much of that in Q1.

Vishal Kampani: This does not include any of the write-backs that we expect on the provisions we have made on our real estate book. There is not much of that in Q1. There is progress being made on that front as well, which again, hopefully we should be able to report in the next nine months.

Speaker #1: But there's progress being made on that front as well, which again, hopefully, we should be able to report in the next nine months. Okay.

Digant Arya: Okay. Great. Vishal, in this ARC part, you said that retail is 15%, 16%, wholesale is maybe around 22%. What portion of the INR 12,000 crore of capital employed in this division, debt plus equity, what portion would earn this kind of yield? Would it be the ones that-

Speaker #1: Okay. Great. So, Vishal, in this ARC part, like, you know, you said that retail is 15, 16 percent, wholesale is, you know, maybe around 22 percent.

Speaker #1: So, what portion of the ₹12,000 crore of capital employed in this division—you know, debt plus equity—would earn this kind of yields?

Speaker #1: Like, would it be, you know, the ones that...

Speaker #2: So, ₹12,000 crore—₹12,000 crore is the value of SR; it's not our capital deployed. So, if you again, if you focus on just page 13...

Vishal Kampani: No, INR 12,000 crores is the value of SR. It's not our capital deployed.

Digant Arya: Right. Yeah.

Vishal Kampani: Again, if you focus on just page-

Speaker #1: So, you're talking about the ROEs, right? What you were saying was the ROEs, right?

Digant Arya: You're talking about the ROE, right? What you were saying was the ROEs, right?

Speaker #2: Yeah. I'm saying the IRR to us—so, I explained to you, it's easy.

Vishal Kampani: Yeah. I'm saying the IRR to us. I'll explain to you.

Digant Arya: Okay. Got that.

Speaker #1: Perfect.

Speaker #2: So, when you see page 13, you see our distressed credit portfolio was ₹3,665 crore at the end of Q4 '26, which is now ₹3,114 crore.

Vishal Kampani: When you see page 13, you see our distressed credit portfolio was INR 3,665 crore at the end of Q4 FY26, which is now INR 3,114 crore. This includes almost INR 1,200 crore of recovery and INR 600 crore of new transactions done, and the movement over here is roughly INR 500, 600 crore. That is our capital deployed. The SRs are where we have syndication and where we have partners also holding the SRs, whether in the form of banks or hedge funds internationally or other large HNIs who are partnering with us. That return belongs to them. Our investment in the INR 12,000 is INR 3,114. When I talk about returns for us now in this INR 3,114, some book is the old book and some book is the new book. A lot of the new book already has got paid.

Speaker #2: This includes almost ₹1,200 crore of recovery and ₹600 crore of new transactions done. And the movement over here is roughly ₹5,600 crore.

Speaker #1: Right.

Speaker #2: So, that is what has been—that is our capital deployed. The SRs are where we have syndication and where we have partners also holding the SRs, whether in the form of banks or hedge funds internationally, or other large HNIs who are partnering with us.

Speaker #2: So, that return belongs to them. So, our investment in the 12,000 is 3,114. So, when I talk about returns for us, now, in this 3,114, some book is the old book, and some book is the new book.

Speaker #2: So, a lot of the new book has already got paid. For the old book, we are waiting on certain resolutions to happen. Assume the book is roughly 50-50.

Vishal Kampani: A lot of the new book already has got paid. The old book, we are waiting on certain resolutions to happen. Assume the book is roughly 50/50. On the new book, which is roughly almost half of the book, INR 1,600 crore, we should be expecting close to 16% to 18% average sort of IRR. That's the way to model it out.

Vishal Kampani: The old book, we are waiting on certain resolutions to happen. Assume the book is roughly 50/50. On the new book, which is roughly almost half of the book, INR 1,600 crore, we should be expecting close to 16% to 18% average sort of IRR. That's the way to model it out.

Speaker #2: And on the new book, which is roughly almost half of the book, ₹1,600 crore, we should be expecting close to 16 to 18 percent average sort of IRR.

Speaker #2: So, that's the way to model it out.

Speaker #1: Perfect. And then once these old ARC transactions get resolved, money comes in, and we deploy it in a similar way. So, that itself increases our yields in that area.

Digant Arya: Perfect. Then once these old ARC transactions, they get resolved, money comes, we deploy it in a similar way, so that itself increases our

Vishal Kampani: Yeah. I'm happy to report that with this kind of cash that we've generated and the expected cash flows over the next six months, our ARC will be debt-free. It's been like a seven-year cycle. Seven years back, we were at peak debt-to-equity of almost three times in the ARC, and we will be debt-free. If we generate all of this cash, then not only are we debt-free, but just the cash should be able to generate going forward safely 15% to 18% IRR. I think we are in a very good position. A lot of hard work done by the ARC team, and we're very happy with the outcome.

Speaker #2: Yeah, so I'm happy to report that with this kind of cash that we've generated, and the expected cash flows over the next six months, our ARC will be debt-free.

Speaker #2: I mean, it's been like a seven-year cycle. Seven years back, we were at a peak debt-to-equity of almost three times in the ARC, and we will be debt-free.

Speaker #2: And if we generate all of this cash, then not only are we debt-free, but just the cash should be able to generate, going forward, safely 16 to 18 percent IRR.

Speaker #2: So, I think it's there in a very, very good position. A lot of hard work done by the ARC team, and we're very happy with the outcome.

Speaker #1: Okay, okay. All right, all right, Vishal. And lastly, if I can just squeeze in, you know, on this syndication, I think there was a good feel of it also this quarter.

Digant Arya: Okay. All right. Vishal, lastly, if I can just squeeze in, on the syndication, I think there was a good fee income also this quarter-

Speaker #3: Sorry to interrupt, Mr. Arya. We are not able to hear you well. Please use a handset while asking your question.

Operator 2: Sorry to interrupt, Mr. Arya. We are not able to hear you well. Please use a handset while asking a question.

Operator: Sorry to interrupt, Mr. Arya. We are not able to hear you well. Please use a handset while asking a question.

Digant Arya: Yeah. Can you hear me now?

Speaker #1: Yeah, can you hear me now?

Speaker #3: Yeah. There is a disturbance in the...

Vishal Kampani: Yeah. A little bit of disturbance.

Speaker #2: There's some echo.

Digant Arya: There is some echo. Okay. Is it better now?

Speaker #1: Okay. Okay. Okay. Is it better now?

Speaker #2: Yeah. Go ahead.

Vishal Kampani: Yeah, go ahead.

Speaker #3: No.

Digant Arya: No. Okay. Maybe I will just try to ask if I am audible. There was a good amount of fee income from syndication also in this quarter. Anything you would just like to highlight here? That's the last from my side. Thank you.

Speaker #1: Okay, okay, okay. Maybe I'll just try to ask if I'm audible. You know, there was a good amount of fee income from syndication also in this quarter.

Speaker #1: So, is there anything you would just like to highlight here? That's the last from my side. Thank you.

Speaker #2: Yeah, yeah. So, on the credit side, we had roughly ₹20 crore of syndication income. So, I think the numbers will only get better over a longer period of time.

Vishal Kampani: Yeah. On the credit side, we have roughly INR 20 crores of syndication income. I think the numbers will only get better over a longer period of time.

Speaker #1: All right. Thank you. Thank you.

Digant Arya: All right. Thank you.

Vishal Kampani: Thank you.

Speaker #2: Thank you.

Operator 2: Thank you. The next question is from the line of Nitin Jain from FairValue Equity Advisory. Please go ahead.

Operator: Thank you. The next question is from the line of Nitin Jain from FairValue Equity Advisory. Please go ahead.

Speaker #3: Thank you. The next question is from the line of Nitin Jain from Fair Value Equity Advisory. Please go ahead.

Speaker #2: Yeah, thank you for the opportunity. So, I would just like to double-click on the wealth-to-business. Although the recurring AUM as a part of the overall AUM has increased over the year, the profitability seems to have dropped sharply in this business.

Nitin Jain: Yeah. Thank you for the opportunity. I would just like to double-click on the wealth business. Although the recurring AUM as a part of the overall AUM has increased over the year, the profitability seems to have dropped sharply in this business. Can you provide some color? What caused this drop?

Speaker #2: Can you provide some color? What caused this drop?

Speaker #1: Sure. I think one of the reasons was highlighted earlier—the fact that transactional revenue has gone down, and that's across the street; transactional volumes have come down.

Vishal Kampani: I think one of the reasons was highlighted earlier that the fact that transactional revenue has gone down, and that's across the street, the transactional volumes have come down. Secondly, also, we've hired a lot of RMs over the last 18 months, as was highlighted earlier. Now all the RMs have a certain gestation cycle of getting profitable in the next two to three-year time frame. We are going through that period where the focus is outrightly on improving productivity and making sure that they are productive and hence profitable in the coming year as well. That's the reason, because we hired massively in the last 18 months. The profitability impact will come in the coming months.

Speaker #1: Secondly, we've also hired a lot of IRMs over the last 18 months, as was highlighted earlier. Now, all the RMs have a certain gestation cycle for becoming profitable in the next two- to three-year timeframe.

Speaker #1: So, we are going through that period where the focus is squarely on improving productivity and making sure that they are productive and hence profitable in the coming year as well.

Speaker #1: So, that's the reason why we hired massively in the last 18 months. The profitability impact will come in the coming months.

Speaker #2: Right. So, just a follow-up to that. You indicated that the major recruitment phase seems to be behind us. So, would it be safe to assume that employee expenses, as a percentage of revenue for this business, should decline going forward, right?

Nitin Jain: Right. Just a follow-up to that. You indicated that the major recruitment phase seems to be behind us. Would it be safe to assume that the employee expenses as percentage of the revenue of this business should decline going forward then?

Speaker #1: Yes, they would have peaked now. We will not stop hiring, but we will hire judiciously and selectively where there are gaps. Most of the hiring is behind us.

Vishal Kampani: Yes, they would have peaked now. We will not stop hiring, but we will hire judiciously and selectively where there are gaps. Most of the hiring is behind us. Also, from a recruitment perspective, we have to understand that wealth is an extremely important channel for us, even from our Investment Banking perspective, purely from a distribution of deals, both on the private as well as the capital market side. Secondly, it's a very important channel for us from marketing our AIFs and marketing some of our asset management products. There needs to be a certain critical size that we need to have. You need to reach that critical size, make that productive, and then after a year to 18 months, again, start reinvesting. That is the journey that we have.

Speaker #2: You know, also from a recruitment perspective, we have to understand that wealth is an extremely important channel for us, even from an investment banking perspective, purely from a distribution of deals, both on the private as well as the capital market side.

Speaker #2: Secondly, it's a very important channel for us for marketing our AIS and marketing some of our asset management products. So, there needs to be a certain critical size that we need to have.

Speaker #2: So, you need to reach that critical size, make that productive, and then after a year to 18 months, again start reinvesting. So, that is the journey that we have.

Speaker #2: We have a five-year plan, which was cleared by the Board last year, and we are following that as closely as we can.

Vishal Kampani: We have a five-year plan, which was cleared by the board last year, and we are following that as closely as we can.

Speaker #1: Okay, that's helpful. My last question is: how are we implementing AI across the firm? For example, if you look at the IB division, the number of companies under research coverage has increased from around 300 to 360.

Nitin Jain: Okay, that's helpful. My last question is, how are we implementing AIF across the firm? Just for example, if you look at the IB division, the number of companies under research coverage, they have increased from around 300 to 360. The employee count also has increased proportionately. Are we not seeing any efficiencies from implementation of AIF yet?

Speaker #1: The employee count has also increased proportionately. So, are we not seeing any efficiencies from the implementation of AI here?

Speaker #2: Well, we've seen very early efficiencies, but unfortunately for us, an AI-driven robot on the sales side is not yet acceptable to buy-side analysts.

Vishal Kampani: Well, we're seeing very early efficiencies, but unfortunately for us, an AIF-driven robot on the sell side is not yet acceptable to buy-side analysts. The day that starts happening, we'll see a tremendous amount of AIF efficiency. Yes, in terms of analysis, scraping annual reports, giving you data, doing comparable company analysis, all of that, yes, is being implemented. Also, we have to be mindful on the regulatory side in terms of what we can do and what we can't do, what kind of disclosures we need to give, while we are using AIF for a lot of the analysis. A lot of work happening. Can we say that we are on completely top of maximizing the AIF potential right now? We are not. When will we get there? Frankly, we don't even know. We're still learning ourselves.

Speaker #2: The day that starts happening, we'll see a tremendous amount of AI efficiencies. So, yes, in terms of analysis—scraping annual reports, giving you data, doing comparable company analysis—all of that, yes, is being implemented.

Speaker #2: Also, we have to be, you know, mindful on the regulatory side in terms of what we can do and what we can't do, and what kind of disclosures we need to give.

Speaker #2: While we are using AI for a lot of the analysis, so there is a lot of work happening. Can we say that we are completely on top of maximizing the AI potential right now?

Speaker #2: We are not. And when will we get there? Frankly, we don't even know. We're still learning ourselves. A lot of the AI you talk about are developments that have happened only in the last six months. As you aggressively start using AI, you know, the token cost can go up like crazy.

Vishal Kampani: A lot of the AIF you talk about are developments that have happened only in the last six months. As you aggressively start using AIF, the token cost can go up like crazy. Let's wait and watch. We are very open to implementing a lot of AIF, and we know that at some point in time, we necessarily will have to. I think this is a better question suited for maybe a year to 18 months down the line in terms of what have you been able to achieve and implement in terms of AIF. I think on the analysis side, on the risk side, you can do a lot, but front office is still limited here.

Speaker #2: So, let's let's wait and watch. We are we are we are very open to implementing a lot of AI, and we know that at some point in time, we necessarily will have to.

Speaker #2: But I think this is a better question suited for maybe a year to 18 months down the line, in terms of what you have been able to achieve and implement in terms of AI.

Speaker #2: I think on the analysis side, on the risk side, you can do a lot, but the front office is still limited here.

Speaker #1: Okay, that's all from us. Thank you.

Nitin Jain: Yes. That's all from my side. Thank you.

Speaker #3: Thank you. The next question is from the line of Ganesh Gupta from SS Family Office. Please go ahead.

Operator 2: Thank you. The next question is from the line of Kanishk Gupta from SS Family Office. Please go ahead.

Operator: Thank you. The next question is from the line of Kanishk Gupta from SS Family Office. Please go ahead.

Speaker #1: Yeah, hello. Very good evening. I would like to ask, on the asset management side of the business, the AUM has largely been flat, but the partners have gone up and the SIP book was down 30%.

Kanishk Gupta: Yeah. Hello, very good evening. I would like to ask on the asset management side of the business, the AUM has largely been flat, but the partners were gone up and SIP book was down 30%. What's being done on that side of the business to get it back on track and keep it growing?

Speaker #1: So, what's being done on that side of the business to get it back on track and keep it growing?

Speaker #2: Hi, this is Nitin Jain. So, if you look at it on a quarter-on-quarter basis, there has been an increase in AUM by almost 16% as far as the non-liquid schemes are concerned.

Nishit Shah: Hi, this is Nishit here. If you look at it on a quarter-on-quarter basis, there has been an increase in the AUM by almost 16% as far as the non-liquid schemes are concerned. Your observation is valid in terms of the SIP book coming down. Having said that, we engaged with a lot of our channel partners. The performance of the schemes, et cetera, has also seen improvement, especially some of the schemes like small cap funds, et cetera. Hopefully that kind of fall will be arrested, especially when we are looking at data in the month of July, et cetera.

Speaker #2: Your observation is valid in terms of the SIP book coming down, but having said that, we engaged with a lot of our channel partners.

Speaker #2: The performance of the schemes, etc., has also seen improvement, especially some of the schemes like small-cap funds, etc., so hopefully that kind of fall will be arrested.

Speaker #2: Now, especially when we are looking at data in the month of July, etc.

Speaker #1: I think one thing was that we had a concentration of more small- and mid-cap schemes. FlexiCap also had a concentration, which was largely in small- and mid-cap.

Vishal Kampani: I think one thing that we had a concentration of more small and mid-cap schemes. Flexi Cap also a concentration which was largely in small and mid-cap. When the small and mid-cap space corrected earlier this year and late last year, that was a time when there was some loss of AUM. What Nishit is saying is that large part of that AUM loss has been corrected. We did not stop engaging with distributors. In fact, we went on the front foot. We engaged more with distributors. We added even more channels of marketing at that point in time. When the revival which has already happened in the last 3 months in terms of performance happens, then we can look forward and add more AUM and add more clients on the mutual fund side.

Speaker #1: So, when the small- and mid-cap space corrected earlier this year and late last year, that was a time when there was some loss of AUM.

Speaker #1: And what Nitin is saying is that a large part of that AUM loss has been corrected. And we did not stop engaging with distributors. In fact, we went on the front foot—we engaged more with distributors.

Speaker #1: We added even more channels of marketing at that point in time. So, when the revival, which has already happened in the last three months in terms of performance, happens, then we can look forward and add more AUM and add more clients on the mutual fund side.

Speaker #1: So, hopefully we should be back on track, both on the SIP book as well as AUM growth, very quickly over the next couple of quarters.

Vishal Kampani: Hopefully we should be back on track both on the SIP book as well as AUM growth very quickly over the next couple of quarters.

Speaker #1: Some kinds of quantitative targets that you can provide, so that will help investors track the progress better.

Kanishk Gupta: Some kinds of quantitative targets that you can provide so that will help investors track the progress better.

Speaker #2: Yeah, we can provide them separately.

Vishal Kampani: Yeah, we can provide them separately.

Speaker #1: Okay. My next question is on the ROE front. You have guided towards a 15% ROE over time. Can you explicitly break it down?

Kanishk Gupta: Okay. My next question would be on the ROE front. You had guided towards a 15% ROE over time. Can you explicitly break it down? What would you consider a steady state ROE through a normalized cycle excluding market tailwinds or peak capital market conditions?

Speaker #1: What would you consider a steady-state ROE through a normalized cycle, excluding market tailwinds or peak capital market conditions?

Speaker #2: Yeah. So, if you look at the ROE of last year, we were almost 11.5%. And we've paid a significant amount of the profit out as dividend.

Vishal Kampani: Yeah. If you look at the ROE of last year, we were almost at 11.5%. We paid a significant amount of the profit out as dividend. As you know that we cannot pay more dividend or give capital back because of restrictions we have in our NBFCs in terms of payout ratios by the regulator. You can't pay more than 50% of your profit in the NBFCs. That actually constrains the amount of capital we can give back. Having said that, this year I think we should be in a similar range or maybe even better in terms of ROE. As the wealth management business becomes more profitable and scales and the losses in asset management reduce, and we attain operating leverage in the AMC business, which is probably two years out, that's when I think you'll see a stronger kicker in ROE.

Speaker #2: And as you know, we cannot pay more dividend or give capital back because of restrictions we have in our NBFCs in terms of payout ratios set by the regulator.

Speaker #2: You can't pay more than 50% of your profit in the NDFCs. That actually constrains the amount of capital we can give back. But having said that, this year I think we should be in a similar range, or maybe even better, in terms of ROE.

Speaker #2: And as the wealth management business becomes more profitable in scales and the losses in asset management reduce, and we attain operating leverage in the AMC business, which is probably two years out, that's when I think you'll see a stronger kicker in ROE.

Vishal Kampani: As the wealth management business becomes more profitable and scales and the losses in asset management reduce, and we attain operating leverage in the AMC business, which is probably two years out, that's when I think you'll see a stronger kicker in ROE. Now again, the CACM business, the Corporate Advisory and Capital Market business over a longer cycle is a very, very high ROE business. Despite the subdued markets, they are at 15% ROE for last quarter. In effect, they're actually a 35% to 40% ROE business. The only place where we could have a ROE lag, which is below the teens, is going to be the private market space over the long term.

Speaker #2: Now, again, the CACM business, the corporate advisory and capital market business over a longer cycle is a very, very high ROE business. Despite despite the subdued markets, they are at 15% ROE for last quarter.

Vishal Kampani: Now again, the CACM business, the Corporate Advisory and Capital Market business over a longer cycle is a very, very high ROE business. Despite the subdued markets, they are at 15% ROE for last quarter. In effect, they're actually a 35% to 40% ROE business. The only place where we could have a ROE lag, which is below the teens, is going to be the private market space over the long term. That is where we want to push on much more syndication income and make that a much larger platform to generate ROEs. That probably is going to be, again, three to four years away. Having said that, the initial traction in the business has been very good. June quarter has been very good in terms of ARC.

Speaker #2: So, in effect, they're they're actually a 35 to 40% ROE business. So, the only place where we could have a ROE lag, which is below the teens, is going to be the private market space over the long term.

Speaker #2: And that is where we want to push much more on syndication income and make that a much larger platform to generate ROEs. And that probably is going to be, again, three to four years away.

Vishal Kampani: That is where we want to push on much more syndication income and make that a much larger platform to generate ROEs. That probably is going to be, again, three to four years away. Having said that, the initial traction in the business has been very good. June quarter has been very good in terms of ARC. We also have a lot of recovery and resolution income, which even in the meanwhile will be able to generate healthy ROEs.

Speaker #2: But having said that, the initial traction in the business has been very good. This quarter, the June quarter, has been very good in terms of ARC.

Speaker #2: And we also have a lot of, you know, recovery and resolution income, which even in the meanwhile, will be able to generate healthy ROEs.

Vishal Kampani: We also have a lot of recovery and resolution income, which even in the meanwhile will be able to generate healthy ROEs.

Speaker #1: And which of these levers is most dependent on market conditions versus purely execution-led?

Kanishk Gupta: Which of these levers is most dependent on market conditions versus purely execution-led?

Speaker #2: No. Capital markets and corporate advisory is completely driven by market conditions. But again, as I said, even market conditions being weak, the business has generated 15% return on equity.

Vishal Kampani: No. Capital markets and corporate advisory is completely driven by market conditions. Again, as I said, even market conditions being weak, the business has generated 15% return on equity. I don't worry about base ROE in that business. Execution is completely on the wealth and asset management business. That is where we have to execute and we have to make sure that we're able to push ROEs into the mid to high teens.

Speaker #2: So, I don't worry about day's ROE in that business. Execution is completely on the wealth and asset management business. That is where we have to execute and we have to make sure that we're able to push ROEs into the mid to high teens.

Speaker #1: Got it. And my last question would be on that. You rightly emphasized continued investment in wealth management and asset management. So, could you help us understand what objective milestones or return thresholds you internally use to evaluate whether these investments are creating shareholder value differently?

Kanishk Gupta: Got it. My last question would be on that you had rightly emphasized continued investment in wealth management and asset management. Could you help us understand what objective milestones or return thresholds you internally use to evaluate whether these investments are creating shareholder value differently?

Speaker #1: What evidence?

Vishal Kampani: Yeah.

Speaker #2: Yeah, so for example, let me give you a short example of our mutual fund business. I think so far, we've invested ₹150 crore in our mutual fund business over the last three years since we started the journey to build it out.

Kanishk Gupta: data

Vishal Kampani: For example, let me give you a short example of our mutual fund business. I think so far we've invested INR 150 crores in our mutual fund business in the last three years when we started the journey to build it out. When we started the journey to build it out, our equity AUM was less than INR 500 crores. Today our equity AUM is almost INR 10,500 crores. By any extent of any comparable valuation that you take, most mutual funds are able to exit at close to 6% to 8% of equity AUM at the minimum. Even if I take a number of 7% on average, it means that the value of the stake we have in the AMC is worth INR 750 crores odd, while the investment that we've put in the AMC is INR 150 crores.

Speaker #2: When we started the journey to build it out, our equity AUM was less than 500 crores. Today, our equity AUM is almost 10,500 crores.

Speaker #2: So, by any extent of, you know, any comparable valuation that you take, most mutual funds are able to exit at close to 6 to 8% of equity AUM at the minimum.

Speaker #2: So, even if I take a number of 7% on average, it means that the value of the stake we have in the AMC is worth ₹750 crores, odd.

Speaker #2: While the investment that we've put in the AMC is ₹150 crores, as I said, they're going to be investing another ₹150 crores over the next two to three years in our AMC.

Vishal Kampani: Now, as I said that we're going to be investing another INR 150 crores over the next two to three years in our AMC. If that is able to take our AUMs in the AMC to INR 25,000 crores, if you use a similar metric of, say, 7% to 8% of AUM, that means INR 300 crores of investment that we have made in the five years, two years, two and a half years forward, has actually created value of over INR 2,000 crores for us. I think because the business is not making profitability today, it's not accretive to ROE and earnings. You're not able to see the value, but the underlying value is being created every year as we keep focusing on the execution. Similar example we can give to you to our high net worth margin trade financing business.

Speaker #2: And if that is able to take our AUMs in the AMC to 25,000 crores, and if you use a similar metric of, say, 7% to 8% of AUM, that means 300 crores of investment that we have made in the five years two years two and a half years forward has actually created value of over 2,000 crores for us.

Speaker #2: So, I think because the business is, you know, not making profitability, today it's not creative to ROE and earnings. You're not able to see the value.

Speaker #2: But the underlying value is being it's being created every year as we keep focusing on the execution. So, similar example we can give to you to our high net worth margin trade financing business.

Vishal Kampani: Similar example we can give to you to our high net worth margin trade financing business. Our margin trade financing book five years ago was less than INR 400 crores. The business is today, the book is almost INR 2,400, INR 2,500 crores, and the combined yield between interest rates as well as the broking yield that we make on this book is almost 30.5%. It's turned out to be a very liquid, relatively safe book to grow. We see that we can easily grow this book again at 15% year on year for the next three years. I think there's some very interesting businesses that have already been built, scaled, and grown, and value has already been created tremendously. We are not short of capital or not even short of talent, we'll continue investing.

Speaker #2: Our margin trade financing book five years ago was less than ₹400 crore. The business today, the book is almost ₹2,400–2,500 crore. And the combined yield between interest rates as well as the broking yield that we make on this book is almost 30.5%.

Vishal Kampani: Our margin trade financing book five years ago was less than INR 400 crores. The business is today, the book is almost INR 2,400, INR 2,500 crores, and the combined yield between interest rates as well as the broking yield that we make on this book is almost 30.5%. It's turned out to be a very liquid, relatively safe book to grow. We see that we can easily grow this book again at 15% year on year for the next three years. I think there's some very interesting businesses that have already been built, scaled, and grown, and value has already been created tremendously. We are not short of capital or not even short of talent, we'll continue investing. Our horizon is much more long-term. We are not a private equity house which needs to exit in the next three to four years.

Speaker #2: And it's turned out to be a very liquid safe relatively safe book to grow. And we see that we can easily grow this book again at 15% year on year for the next three years.

Speaker #2: So, I think there are some very interesting businesses that have already been built, scaled, and grown, and value has already been created tremendously. We are not short of capital, and we are not even short of talent.

Speaker #2: So, we'll continue investing. Our horizon is much more long-term. We are not a private equity house that needs to exit in the next three to four years.

Vishal Kampani: Our horizon is much more long-term. We are not a private equity house which needs to exit in the next three to four years. We'll keep building this business with a perspective which is almost a decade or more.

Speaker #2: So, we'll keep building this business for with a with a with a perspective which is almost a decade or more.

Vishal Kampani: We'll keep building this business with a perspective which is almost a decade or more.

Speaker #1: Got it. Thank you very much. And all the very best for the future.

Kanishk Gupta: Got it. Thank you very much, all the very best for the future.

Speaker #2: Thank you.

Vishal Kampani: Thank you.

Speaker #3: Thank you. Participants who wish to ask questions may place chat in one at this time. The next question is from the line of Umang Adatiya from an individual investor.

Operator 2: Thank you. Participants who wish to ask questions may press star and one at this time. The next question is from the line of Umang Adatia from an Individual Investor. Please go ahead.

Operator: Thank you. Participants who wish to ask questions may press star and one at this time. The next question is from the line of Umang Adatia from an Individual Investor. Please go ahead.

Speaker #3: Please go ahead.

Speaker #4: Sir, first of all, great set of results. I want to ask one question about the private markets. Sir, since you mentioned to one of the fellow participants in the call, the private market ROE would remain in the teens.

Umang Adatia: Sir, first of all, great set of results. I want to ask one question about the private markets. Sir, since you mentioned to one of the fellow participant in the call that private market ROI would remain in teens for next few years. Sir, my question is that so much of the capital is employed in private markets, whether management is thinking of any capital mix in the coming time? As you can see, 60% to 65% of the capital employed is in the private markets, and you know that private markets is literally dragging ROI down of the overall group. Any comment on that?

Speaker #4: For the next few years. So, sir, my question is that so much of the capital is employed in the private market. Is management considering any change in the capital mix in the coming time? As you can see, 60% to 65% of the capital employed is in the private market, and you know that ROE in the private market is literally dragging ROE down for the overall group.

Speaker #4: So, any comment on that?

Speaker #2: Yeah. So, that's a that's a very good observation. And we are acutely aware of it. See, as I explained to you that bulk of our net worth is in our in our two large MDFCs, JM Financial Credit Solutions and JM Financial Products.

Vishal Kampani: Yeah. That's a very good observation, and we are acutely aware of it. See, as I explained to you that bulk of our net worth is in our two large NBFCs, JM Financial Credit Solutions and JM Financial Products. As I said that these NBFCs also have debt. Our leverage is one is to one, and we have debt which is payable nicely over the next six, seven years. It's well distributed. In the business, we are generating good profit from interest income as well as investments. The point is, as per RBI rules, we cannot distribute more than 50% of our PAT out as per their rules. If private markets, for example, has made a profit of, say, INR 250 crores, I cannot this quarter distribute more than INR 125 crores of it.

Speaker #2: And as I said that, you know, these these MDFCs also have debt. Our our leverage is one is to one and we have debt which is payable nicely over the next six, seven years.

Speaker #2: It's well distributed. And we are making we are in the business we are generating good profit from interest income as well as investments. So, the point is as per RBI rules, we cannot distribute more than 50% of our PAC, you know, out as per their rules.

Speaker #2: So, if private markets, for example, has made a profit of, say, you know, ₹250 crore, I cannot this quarter distribute more than ₹125 crore of it.

Speaker #2: That means 50% of this net worth is actually getting plowed back into business because of regulatory reasons. And therefore, we have to have growth both on the syndication side as well as the loan book side as well as the investment side, such that we're able to make adequate returns.

Vishal Kampani: That means 50% of this net worth is actually getting plowed back into business because of regulatory reasons. Therefore, we have to have growth both on the syndication side as well as the loan book side, as well as the investment side, such that we are able to make adequate returns. I would imagine that our current debt equity, which has reached 0.8 times, I think we're almost at a low, and going forward over the next two to three years, the debt equity will climb back. If you look at page 13 again, debt equity in FY24 was 1.9, and it's come down to 0.8. That's another reason why the ROE is hurting. The business is immensely profitable. It's just that we are not taking in enough of transactions today, and therefore, we don't have a need for leverage.

Speaker #2: I would imagine that our current debt equity, which is reached 0.8 times I think we're we're almost at a low and going forward over the next two to three years, the debt equity will climb back.

Speaker #2: If you look at page 13 again, debt equity in FY24 was 1.9 and it's come down to 0.8. And that's another reason why the ROE is hurting.

Speaker #2: The business is immensely profitable. It's just that we are not taking in enough of transactions today. And therefore, we don't have a need for leverage.

Speaker #2: As the syndication business starts ramping up, the picture will change. And I see us, within a period of three years, being back to 2x debt-to-equity.

Vishal Kampani: As the syndication business starts ramping, the picture will change, and I see us, within a period of three years, being back to two times debt equity, and therefore, the ROEs will substantially improve. The point I was trying to make is that we have a lot of resolutions in our ARC, and sort of the recoveries on the provided book in real estate, which will be able to add profit in the next eight quarters, giving you a decent ROE despite the pickup in the book taking two to three years. We are kind of hedged in a way.

Speaker #2: And therefore, the ROEs will substantially improve. The point I was trying to make is that we have a lot of resolutions in our ARC.

Speaker #2: Which and sort of the recoveries on the provided book in real estate, which will be able to add profit in the next eight quarters, giving you a decent ROE, despite the pickup in the book taking two to three years.

Speaker #2: So, we are kind of hedged in a way. And when we reach that 2:1 debt-equity kind of milestone over the next three years, with syndication income flowing through, you will see a healthy sort of teens income, because inherently with syndication, the ROA of the business needs to be rich enough that you don't need to lever to four to five times to make that kind of returns.

Vishal Kampani: When we reach that 2 is to 1 debt-equity kind of milestone over the next three years with syndication income flowing through, you will see a healthy sort of teens income, because inherently with syndication, the ROE of the business needs to be rich enough that you don't need to lever to four to five times to make that kind of returns. Again, that is the reason why when you see the investment side on page 13, it's a very well diversified book. We target 16% to 18% on the distressed credit book. The cash unfortunately is sitting at 6% and we have INR 3,000 crore of cash, which hopefully we should be able to deploy, as I said. We've increased our allocation to alternatives, to almost INR 500 odd crore, which used to be an INR 300 crore number.

Speaker #2: And again, that is the reason why when you see the investment side on page 13, it's a very well diversified book. We target 16 to 18% on the distress credit book, right?

Speaker #2: The cash unfortunately sitting at 6% and we have 3,000 crores of cash which hopefully we should be able to deploy as I said. And we've increased our allocation to to alternatives to almost 500 odd crores which used to be a 300 crore number.

Speaker #2: With regard to public equities, we've kept the number at ₹970 crore. It's been in the ₹900 crore range for the last five quarters. But if we see a market correction, if we see that there are returns to be made in public equities on a risk-adjusted basis of 15% to 16%, we will deploy more in public equities.

Vishal Kampani: The two public equities, we've kept the number at INR 970 crore. It's been in the INR 900 crore range for the last five quarters. If we see a market correction, if we see that there are returns to be made in public equities on a risk-adjusted basis of 15% to 16%, we will deploy more in public equities. On the loan book side, we have Bespoke, we have real estate. The combination of Bespoke and real estate, we target a return of roughly 13% to 14%. That is the kind of strategy for what returns we want from our standard loans and our investments in the private market space. The mix also over time will change. See, if you look at FY24, our standard loans were INR 10,000 crore, our investments, including distressed credit, were roughly INR 8,500 crore.

Speaker #2: On the loan book side, we have bespoke; we have real estate. In combination, for bespoke and real estate, we target a return of roughly 13% to 14%.

Speaker #2: So, that is the kind of strategy for what returns we want from our standard loans and our investments in the private market space. Now, even the the now the mix also over time will change.

Speaker #2: See, if you look at FY24, right, our standard loans were ₹10,000 crore, but our investments, including distress credit, were roughly ₹8,500 crore.

Speaker #2: While the investment ratio has remained the same at around 8,000, the standard loan has decreased from 10,000 to 4,000, largely because the real estate and the non-core book came down, right?

Vishal Kampani: While the investment ratio number has remained the same at around INR 8,000 crore, the standard loan has decreased from INR 10,000 crore to INR 4,000 crore, largely because of real estate and the non-core book came down. This INR 4,000 crore number, as I explained to Digant, will start increasing at 15% to 20% every year. In the next three years, you potentially will see that number close to INR 7,000 crore to INR 7,500 crore to INR 8,000 crore. It'll be a good 1 is to 1 kind of mix between investments and standard loans, and you will have recovery income. Therefore, the profitability will go up even faster.

Speaker #2: This 4,000 crore number as I explained to Digant will start increasing at 15 to 20% every year. So, in the next three years, you potentially will see that number close to 7 to 7 and a half to 8,000.

Speaker #2: So, it'll be a good one—it's a kind of mix between investments and standard loans. And you will have recovery income, and therefore the profitability will go up even faster.

Speaker #2: What we maintained is that, because of the capital that we have, we should be able to use a lot of the profits we earn from these NBFCs, and almost 50% of that is allowed from a regulatory perspective.

Vishal Kampani: What we've maintained is that because of the capital that we have, we should be able to use a lot of the profits we earn from these NBFCs. Almost 50% of that is allowed from a regulatory perspective, will be given back as dividend and paid out to shareholders.

Speaker #2: It will be given back as dividend and paid out to shareholders.

Speaker #4: Okay, sir. We'll join back in with you.

Anuj Kapoor: Okay, sir. We'll join back in with you.

Umang Adatia: Okay, sir. We'll join back in with you.

Speaker #2: Yeah.

Vishal Kampani: Yeah.

Speaker #1: Thank you. The next question is from the line of path from Dam Capital. Please go ahead.

Operator 2: Thank you. The next question is from the line of Parth from DAM Capital. Please go ahead.

Operator: Thank you. The next question is from the line of Parth from DAM Capital. Please go ahead.

Speaker #3: Oh, hi. Thank you for the opportunity. Am I audited?

[Analyst] (DAM Capital): Hi, thank you for the opportunity. Am I audible?

Parth Jariwala: Hi, thank you for the opportunity. Am I audible?

Speaker #2: Yes, go ahead.

Vishal Kampani: Yes, go ahead.

Speaker #3: Sir, I have a very similar question to a previous participant, on a similar topic. So, sir, I understand that till we achieve a certain scale, there will be some cyclicality built into the business because of transaction revenues.

[Analyst] (DAM Capital): Sir, I have a very similar question to a previous participant on the wealth side of it. Sir, I understand that till we achieve a certain scale, there would be certain cyclicality built to the business because of transactional revenues. I just want to get a sense on how we are focusing on getting the ARR numbers better, and what are the kind of targets our RMs have right now to see that you have the five-year plan which you have decided for is kind of met. Essentially, I'm trying to get a sense on what kind of earnings taper you are looking at in the next couple of years for us. Some color would be useful here, sir.

Parth Jariwala: Sir, I have a very similar question to a previous participant on the wealth side of it. Sir, I understand that till we achieve a certain scale, there would be certain cyclicality built to the business because of transactional revenues. I just want to get a sense on how we are focusing on getting the ARR numbers better, and what are the kind of targets our RMs have right now to see that you have the five-year plan which you have decided for is kind of met. Essentially, I'm trying to get a sense on what kind of earnings taper you are looking at in the next couple of years for us. Some color would be useful here, sir.

Speaker #3: But I just want to get a sense on how kind of we are focusing on getting the ARR numbers better and what are the kind of targets our RMs have right now to see that you have a the the five-year plan which we have decided for is kind of met.

Speaker #3: So, essentially, I'm trying to get a sense of what kind of earnings table you are looking at in the next couple of years for us.

Speaker #3: Some color would be useful here, sir.

Speaker #2: Sure. I will answer that question. Sure. So, as we mentioned, we hired about 100 plus RMs over the last 18 months. Now, the average life of an RM to become profitable is roughly about two and a half to three years.

Vishal Kampani: Sure. Anuj will answer that question.

Anuj Kapoor: Sure. As we mentioned, we hired about 100-plus RMs over the last 18 months. The average life of an RM to become profitable is roughly about two and a half to three years. We've split the RM cohort between the old and the new cohorts. The old cohort is very well productive and profitable, and we continue to monitor that profitability and growth in that profitably very, very closely. In the new cohort, the whole focus is on making sure that the productivity enhances and that gets supplemented by a lot of factors with a lot of third-party alliances that we're doing in the market because of the scale that we have achieved now on the distribution side. Secondly, we are doing our own product. As we spoke about some of the AIFs that we have launched on pre-IPO and credit.

Speaker #2: So, we've split the RM cohort between the old and the new cohorts. Now, the old cohort is very well productive and profitable. And we continue to monitor that profitability and growth in that profitably very, very closely.

Speaker #2: In the new cohort, the whole focus is on making sure that the productivity enhances and that gets supplemented by a lot of factors with a lot of third-party alliances that we're doing in the market because of the scale that we have achieved now on the distribution side.

Speaker #2: Secondly, we are doing our own product, as we spoke about some of the AIs that we have launched on pre-IPO and credit. That distribution gets scaled up with the scale-up that we have in work.

Anuj Kapoor: As we spoke about some of the AIFs that we have launched on pre-IPO and credit. That distribution gets scaled up with the scale-up that we have as well. Thirdly, also with closer collaboration with some of the other divisions within the firm, especially the investment bank and the equities business. All in all, the whole idea is to focus on productivity, enhancing productivity, and making sure that the new cohort of these 100-plus RMs get to profitability within the next year or so. That's what we're focusing on. We are closely monitoring the net new money additions being made by each and every single RM and the team's profitability is something that we are monitoring.

Anuj Kapoor: That distribution gets scaled up with the scale-up that we have as well. Thirdly, also with closer collaboration with some of the other divisions within the firm, especially the investment bank and the equities business. All in all, the whole idea is to focus on productivity, enhancing productivity, and making sure that the new cohort of these 100-plus RMs get to profitability within the next year or so. That's what we're focusing on. We are closely monitoring the net new money additions being made by each and every single RM and the team's profitability is something that we are monitoring. In terms of the revenue growth that we are targeting, just to broadly talk about the industry is growing at early to mid-teens, and given the growth that we are targeting, we are targeting in excess of the industry growth that is expected.

Speaker #2: And thirdly, also with closer collaboration with some of the other divisions within the firm especially the investment bank and the equities business. So, all in all, the whole idea is to focus on productivity enhancing productivity and making sure that the new cohort of RMs these 100 plus RMs get to profitability in the within the next year or so.

Speaker #2: And that's what we're focusing on. We are closely monitoring the net new money additions being made by each and every single RM, and the team's profitability.

Speaker #2: That is something that we are monitoring. In terms of the revenue growth that we are targeting, just to broadly talk about the industry, the industry is growing at early to mid-teens.

Anuj Kapoor: In terms of the revenue growth that we are targeting, just to broadly talk about the industry is growing at early to mid-teens, and given the growth that we are targeting, we are targeting in excess of the industry growth that is expected.

Speaker #2: And we given the growth that we are targeting, we are targeting in excess of the industry growth that is expected.

Speaker #3: Got it. Just one thing here. What kind of net interest are we expecting for this year? And could you give the number for this quarter versus the previous quarter?

[Analyst] (DAM Capital): Got it. That does help. Just one thing here. What kind of net inflows are we expecting for this year? Could you give the number for this quarter versus previous quarter?

Parth Jariwala: Got it. That does help. Just one thing here. What kind of net inflows are we expecting for this year? Could you give the number for this quarter versus previous quarter?

Speaker #2: I think the net flows for this quarter is roughly around 2,000 odd crores. And as we had guided earlier on the last year's call, we are targeting about 6,000 odd crores.

Anuj Kapoor: I think the net flows for this quarter is roughly around INR 2,000 odd crores. As we had guided earlier on the last year's call, we are targeting about INR 6,000 odd crores at the minimum.

Speaker #2: At the minimum.

Speaker #3: Understood. That's it from us. Thank you so much.

[Analyst] (DAM Capital): Understood. That's it from my side. Thank you so much.

Parth Jariwala: Understood. That's it from my side. Thank you so much.

Speaker #1: Thank you. The next question is from the line of Siddharth S. from NAFA. Please go ahead.

Operator 2: Thank you. The next question is from the line of Sidharth from NAFA. Please go ahead.

Operator: Thank you. The next question is from the line of Sidharth from NAFA. Please go ahead.

Speaker #3: Good evening. So, I just like to get some clarity on if you have any plans to venture into the gold loan books in your NBFC division.

[Company Representative] (NAFA): Good evening. I just like to get some clarity on if you have any plans to venture into the gold loan books in your NBFC division. I see that your housing loan segment has seen a very healthy growth. I just want to confirm if you have any plans to enter there. Yeah, that's something.

Speaker #3: I see that your housing loan segment has, you know, seen a very healthy growth. I just want to confirm if you have any plans to enter there, and yeah, that's something.

Speaker #2: No. So, Manish here from JM Financial Home Loans. Basically, there is no plan today to enter any of these non-core businesses. As of now, we are concentrating more on the home loan business.

Manish Sheth: Manish here from JM Financial Home Loans. Basically, there is no plan today to enter any of this non-core business. As of now, we are concentrating more on the home loan business.

Speaker #3: Yeah, we keep evaluating businesses all the time, but as of now, absolutely no interest in entering gold loans. Understood. Thank you.

Vishal Kampani: Yeah, we keep evaluating businesses all the time, as of now, absolutely no interest in entering gold loans.

[Company Representative] (NAFA): Understood. Thank you.

Speaker #1: Thank you. The next question is from the line of Vinay and individual investor. Please go ahead.

Operator 2: Thank you. The next question is from the line of Vinay, an individual investor. Please go ahead.

Operator: Thank you. The next question is from the line of Vinay, an individual investor. Please go ahead.

Speaker #3: Hello. Yeah, can you hear me?

[Company Representative]: Hello. Yeah. Can you hear me?

[Shareholder] (Individual Investor): Hello. Yeah. Can you hear me?

Speaker #2: Yes, please go ahead.

Vishal Kampani: Yes, please go ahead.

Speaker #3: Yeah, yeah. Actually, there is a lot of tailwind for capital market businesses that's been going on for the last four to five years. But what I have seen is that we are still not able to capitalize on it.

[Company Representative]: Yeah. Actually, there is a lot of tailwind for capital market businesses that's going on for last four to five years. What I have seen that we are still not able to capitalize on it. Sure, we are doing some acts on it and we have planned last year and you are guiding for the future that we are focusing on it. Still, what kind of a roadmap are you seeing for wealth management, for asset management? Second part question is that, as a investor in JM Financial, I am holding all of the bunch of businesses. Are you planning any kind of demerger? As you said on the call itself that your asset management business is valuable, having a nice INR 750 crore valuation, but it's not reflecting those of losses.

[Shareholder] (Individual Investor): Yeah. Actually, there is a lot of tailwind for capital market businesses that's going on for last four to five years. What I have seen that we are still not able to capitalize on it. Sure, we are doing some acts on it and we have planned last year and you are guiding for the future that we are focusing on it. Still, what kind of a roadmap are you seeing for wealth management, for asset management? Second part question is that, as a investor in JM Financial, I am holding all of the bunch of businesses. Are you planning any kind of demerger? As you said on the call itself that your asset management business is valuable, having a nice INR 750 crore valuation, but it's not reflecting those of losses.

Speaker #3: Sure, we are doing some act on it and your plan last year and you are guiding for the future that we are focusing on it.

Speaker #3: But still, what kind of roadmap are you seeing for wealth management for asset management and second part question is that as a investor in JM Financial, I'm holding all of the bunch of businesses.

Speaker #3: Are you planning any kind of emergence? So, if I am interested—as you said on the call itself—that your asset management business is valuable, having a nice ₹750 crore valuation, but it's not reflecting growth of losses.

Speaker #3: So, are you planning any kind of demerger, similar to what Edelweiss has done for Nuvama Wealth, or what IIFL has done for 360 Wealth Management and broking business demergers?

[Company Representative]: Any kind of a demerger kind of things that you are planning like Edelweiss has done for Nuvama Wealth and your IIFL has done for 360 ONE Wealth and broking business also demerger. The value unlocking.

[Shareholder] (Individual Investor): Any kind of a demerger kind of things that you are planning like Edelweiss has done for Nuvama Wealth and your IIFL has done for 360 ONE Wealth and broking business also demerger. The value unlocking.

Speaker #3: So the value unlocking.

Speaker #2: Yeah. Yeah. Yeah. I'll answer that. I'll answer that. So, first of all, I think if you if you break up the capital markets business, you have to see what we do in corporate advisory and capital markets.

Vishal Kampani: Yeah. I'll answer that. First of all, I think if you break up the capital markets business, you have to see what we do in corporate advisory and capital markets. If you see page 11 of our investor presentation, in FY24, our revenue was INR 592 crores. If you take that number back to FY22 or FY23, the number would have been close to INR 350 crores or INR 400 crores. Even from FY24, an INR 592 crore number has grown to INR 946 crores last year. In fact, in the last 3 years, because of the West Asia war, et cetera, we first time saw a significant slowdown in the last six months in terms of the transaction activity.

Speaker #2: If you see page 11 of our investor presentation, in FY24 our revenue was ₹592 crore. If you take that number back to FY22 or FY23, the number would have been close to ₹350 crore or ₹400 crore.

Speaker #2: But even from FY24, a ₹592 crore number has grown to ₹946 crores last year. In fact, in the last three years, because of the West Asia war, etc., etc., we, for the first time, saw a significant slowdown in the last six months in terms of the transaction activity.

Speaker #2: Otherwise, we are well on course in this business to have almost hit ₹1,000 crore plus this year in terms of combined revenue of our investment banking, ECM, DCM, and institutional equity franchise.

Vishal Kampani: Otherwise, we are well on course in this business to almost would have hit INR 1,000 crores plus this year in terms of combined revenue of our investment banking, ECM, DCM, and institutional equity franchise. I think there has been tremendous growth, and I think we're one of the firms that has capitalized the most on it from a corporate advisory and capital markets business. Even when you look at our wealth management business, there has been significant growth on the broking side, as well as if you look at the revenues in FY24, which was INR 1,022 crores, FY26 resulted in INR 1,400 crores. In 2 years, there's been a 40% growth in revenues. The reason the profitability has grown from INR 91 crores to INR 165 crores is because between wealth management, broking, and asset management, there has been significant investments being made on the pure wealth management and asset management.

Speaker #2: So, I think there has been tremendous growth, and I think we're one of the firms that has capitalized the most on it from a corporate advisory and capital markets business.

Speaker #2: Even when you look at our wealth management business, there has been significant growth on the broking side as well as if you look at the revenues in FY24, which was 1,022 crores, FY26 resulted in 1,400 crores.

Speaker #2: So, in two years, there's been a 40% growth in revenues. But the reason the profitability has grown from 91 to 165 is because, between wealth management, broking, and asset management, there's been significant investments made in pure wealth management and asset management.

Vishal Kampani: The reason the profitability has grown from INR 91 crores to INR 165 crores is because between wealth management, broking, and asset management, there has been significant investments being made on the pure wealth management and asset management. Right? Broking is built out a lot more and is a larger business compared to the other two, and is already making a lot of profit. We are rechannelizing the profits of our broking business and building a larger fee, commissions, and distribution business and a much larger asset management business. I think there is tremendous amount of growth here. It just needs to result in more profitability from the investments already made.

Speaker #2: Right? Broking is built out a lot more, and it's a larger business compared to the other two, and is already making a lot of profit.

Vishal Kampani: Right? Broking is built out a lot more and is a larger business compared to the other two, and is already making a lot of profit. We are rechannelizing the profits of our broking business and building a larger fee, commissions, and distribution business and a much larger asset management business. I think there is tremendous amount of growth here. It just needs to result in more profitability from the investments already made. Coming to your last question on demerger, I think I've answered it before as well, that we still feel that compared to our capital markets, corporate advisory, and private markets business, wealth and asset management is still small. We want to make it larger, give it a lot more scale. At that point in time, we will evaluate whether this business needs to go public or needs to be demerged.

Speaker #2: So, we are rechanneling the profits of our broking business and building a larger fee and commissions and distribution business, and a much larger asset management business.

Speaker #2: So I think there is tremendous amount of growth here. It just needs to result in more profitability from the investments already made. And coming to your last question on demerger, I think I've answered it before as well that we still feel that compared to our capital markets corporate advisory and private markets business, wealth and asset management is still small.

Vishal Kampani: Coming to your last question on demerger, I think I've answered it before as well, that we still feel that compared to our capital markets, corporate advisory, and private markets business, wealth and asset management is still small. We want to make it larger, give it a lot more scale. At that point in time, we will evaluate whether this business needs to go public or needs to be demerged. All of these demergers, et cetera, need to be seen from a lens of taxation as well. I understand they are shareholder-friendly, it cannot result in any kind of tax sort of leakage for us. We have to be careful while taking those decisions. At the right time, when we are more profitable in wealth and asset management, we will evaluate demerger or maybe a separate listing.

Speaker #2: We want to make it larger and give it a lot more scale. At that point in time, we will evaluate whether this business needs to go public or needs to be demerged.

Speaker #2: And all of these demergers, etc., need to be seen from a lens of taxation as well. I understand their shareholder friendly. But it cannot result in you know any kind of you know tax sort of leakage for us.

Vishal Kampani: All of these demergers, et cetera, need to be seen from a lens of taxation as well. I understand they are shareholder-friendly, it cannot result in any kind of tax sort of leakage for us. We have to be careful while taking those decisions. At the right time, when we are more profitable in wealth and asset management, we will evaluate demerger or maybe a separate listing.

Speaker #2: So we have to be careful while taking those decisions. But at the right time, when we are more profitable in wealth and asset management, we will evaluate a demerger or maybe a separate listing.

Speaker #3: Okay, we have one question—last question. Where do you see, in three to five years, the total wealth management as an asset base? Where do you see we are? Basically, on wealth management, are you focusing more, or is the asset management mutual fund part where you are mainly focusing? Or is it on wealth management? Where is the main focus?

[Company Representative]: Okay. Just one question, last question. Where you see your three to five years, the total wealth management as an asset base, basically more on wealth management you're focusing or asset management? Mutual fund part you are mainly focusing or on the wealth management? Where is the main focus?

[Shareholder] (Individual Investor): Okay. Just one question, last question. Where you see your three to five years, the total wealth management as an asset base, basically more on wealth management you're focusing or asset management? Mutual fund part you are mainly focusing or on the wealth management? Where is the main focus?

Speaker #2: No, no. We are focusing on both. So, we are focusing on pure wealth management, and we are also focusing on wealth management which is led by broking.

Vishal Kampani: No. We are focusing on both. We are focusing on pure wealth management. We are focusing on wealth management, which is led by broking. We are focused on asset management in terms of mutual funds, and we are also focused on alternatives. We have a credit alternatives fund and a JM Pre-IPO Fund, and we will add more to the AIF basket over time. The idea is to focus on each of these, and there is a very interesting flywheel that operates among these businesses. The larger our wealth management gets, the more they can distribute our asset management products. That flywheel works very, very well. It's a focus on everything.

Speaker #2: We are focused on asset management in terms of mutual funds, and we are also focused on alternatives. We have a credit alternatives fund, and we have a PIPO fund, and we'll add more to the AIF basket over time.

Speaker #2: So, the idea is to focus on each of these, and there is a very interesting flywheel that operates among these businesses. The larger our wealth management gets, the more they can distribute our asset management products.

Speaker #2: So that flywheel works very, very well there. So it's a focus on everything.

Speaker #3: Okay. Thank you. Good luck for the future. Thank you. That's all.

[Company Representative]: Okay. Thank you. Good luck for the future. Thank you. That's all my questions.

[Shareholder] (Individual Investor): Okay. Thank you. Good luck for the future. Thank you. That's all my questions.

Speaker #2: Thank you. Thank you.

Speaker #1: Thank you. The next question is from the line of Akshay Jawar, an individual investor. Please go ahead.

Vishal Kampani: Thank you.

Operator 2: Thank you. The next question is from the line of Akshay Jawade, an individual investor. Please go ahead.

Operator: Thank you. The next question is from the line of Akshay Jawade, an individual investor. Please go ahead.

Speaker #3: Yeah. Hi. Am I audible?

Akshay Jawade: Yeah. Hi, am I audible?

Speaker #2: Yes.

Vishal Kampani: Yes.

Speaker #3: Yeah. So I had a question on the ARC business that you know we refer to the 1,200 crores our share. Given the lumpy nature of the transaction like you mentioned, I want to know I wanted to understand how did this specific transaction impact the net revenue for the private markets in Q1 27?

Akshay Jawade: Yeah. I had a question on the ARC business that we refer to the INR 1,200 crore our share. Given the lumpy nature of the transaction, like you mentioned, I wanted to understand how does this specific transaction impact the net revenue for the private markets in Q1 FY27? Because on the face of it, you see a 2x growth in net revenue, but my understanding is that this was not there in Q1 FY26. How much of the Q1 FY27 is impacted by the single transaction? Like you mentioned that you are expecting some more recovery from the ARC fees in the balance part of the year. How much would that be that you're expecting?

Speaker #3: Because on the face of it you see a 2x growth in net revenue but my understanding is that this northern Q1 26 so how much of the Q1 27 is impacted by the single transaction and how and like you mentioned that you know you are expecting some more recoveries from the ARC fees in the next in the balance part of the year.

Speaker #3: How much would that be that you're expecting?

Speaker #2: Yeah. So I think it's quite simple. So basically if you look at the as I explained the 3,000 crores of SR investment that we have on our private markets balance sheet, we are kind of modeling to make 16 to 18% return on that.

Vishal Kampani: Yeah. I think it's quite simple. If you look at, as I explained, the INR 3,000 crores of SR investment that we have-

Vishal Kampani: Yeah. I think it's quite simple. If you look at, as I explained, the INR 3,000 crores of SR investment that we have on our private markets balance sheet, we are kind of modeling to make 16% to 18% return on that. The 16% to 18% return on that is revenues. Obviously, this is funded partly by debt, partly by equity, but the debt will go down substantially. Once the debt goes down substantially by the end of this year, you will see on the remaining SR book, we are targeting 16% to 18% return to be generated on the same. What happens is we don't technically book all of this income every quarter. It's a bit lumpy in nature. Large part of the income is always booked when the resolution of the asset happens.

Vishal Kampani: on our private markets balance sheet, we are kind of modeling to make 16% to 18% return on that. The 16% to 18% return on that is revenues. Obviously, this is funded partly by debt, partly by equity, but the debt will go down substantially. Once the debt goes down substantially by the end of this year, you will see on the remaining SR book, we are targeting 16% to 18% return to be generated on the same. What happens is we don't technically book all of this income every quarter. It's a bit lumpy in nature. Large part of the income is always booked when the resolution of the asset happens. You saw a substantial profit that came into the Q2 because the resolution happened, the cash flow was banked by us, and therefore, we booked the profit.

Speaker #2: And the 16% to 18% return on that is revenues. Obviously, this is funded partly by debt and partly by equity. But the debt will go down substantially—once the debt goes down substantially by the end of this year.

Speaker #2: You will see, on the remaining SR book, we are targeting a 16% to 18% return to be generated on the same. Now, what happens is we don't technically book all of this income every quarter.

Speaker #2: It's a bit lumpy in nature. Large part of the income is always booked when the resolution of the asset happens. And therefore you saw a substantial profit that came into the June quarter because the resolution happened the cash flow was banked by us and therefore we booked the profit.

Vishal Kampani: You saw a substantial profit that came into the Q2 because the resolution happened, the cash flow was banked by us, and therefore, we booked the profit. That is why it's lumpy, but the book growth will not be as lumpy as the profit lumpiness. You will see that we'll keep investing. For example, we got INR 1,200 crores of cash flow, 3,665, which was the number in quarter 2026, would go down to approximately INR 1,200 crores. Which takes it to around 2,400, and then we redeployed INR 600 to 700 crores in other assets, and therefore, the SR number came back to 3,114.

Speaker #2: So that is why it's lumpy, but the book growth will not be as lumpy as the profit lumpiness. You will see that we'll keep investing.

Vishal Kampani: That is why it's lumpy, but the book growth will not be as lumpy as the profit lumpiness. You will see that we'll keep investing. For example, we got INR 1,200 crores of cash flow, 3,665, which was the number in quarter 2026, would go down to approximately INR 1,200 crores. Which takes it to around 2,400, and then we redeployed INR 600 to 700 crores in other assets, and therefore, the SR number came back to 3,114.

Speaker #2: For example, we got 1,200 crores of cash flow. So 366 3665 which was the number in quarter 26 would go down by approximately 1,200 crores.

Speaker #2: Right? Which takes it to around 2,400. And then we redeployed 600 to 700 crores in other assets. And therefore, the SR number came back to 3,114.

Speaker #3: Understood.

Akshay Jawade: Understood.

Speaker #2: And, you know, we kind of like the split of the investment book right now. What you will see is that if the equity markets get more attractive from a risk-return perspective, we can always allocate more cash to equity.

Vishal Kampani: We kind of like the split of the investment book right now. What you will see is that if the equity markets get more attractive from a risk return perspective, we can always allocate more cash to equity, which is only at INR 970 crores today. Equity, we try and model 14% to 15% kind of returns. The standard loan book, as I explained earlier, will keep growing. The bespoke book will keep growing at 15% to 20% a year, and that will take leverage to basically grow. We're already at 0.8 times gross debt to equity. On a net basis, we are even lower. Balance sheet is in extremely good shape already, and now we're just focusing on growth.

Speaker #2: Which is only at 970 crores today. Equity we try and model 14 to 15% kind of returns. And and the standard loan book as I explained earlier will keep growing.

Speaker #2: I mean the bespoke book will keep growing at 15 20% a year. And you know that will take leverage to basically grow. And we already at 0.8 times gross debt to equity on a net basis we are even lower.

Speaker #2: So, the balance sheet is in extremely good shape already, and now we're just focusing on growth here.

Speaker #3: Understood. And if you want to look at one of the previous calls, the call last time after Q4, we basically estimated that it would take six months for the capital markets piece to recover.

Akshay Jawade: Understood. I think on one of the previous call, the call last time after Q4, you basically estimated that it will take six months for the capital market fees to recover.

Vishal Kampani: Yes.

Speaker #3: But I think at the starting of the call you mentioned that July has been better than June.

Akshay Jawade: I think at the starting of the call, you mentioned that July has been better than June.

Vishal Kampani: Yeah. To our positive surprise, I think July has been a very good month. As I said that most likely the revenues of just the month of July are more than the revenues for the entire quarter of June.

Speaker #2: Yeah. So to our to our positive surprise I think July has been a very very good month. As I said that most likely the revenues of just the month of July are more than the revenues for the entire quarter of June.

Speaker #3: Okay. So, yeah, answering your question, I followed only for the month of June. All right. Okay. Yeah, I think that's from my side.

Akshay Jawade: Okay. I hope that answers my question. Yeah. It answers my question. I thought it was only for the month of June. All right. Okay. Yeah, I think that's all from my side. Thank you.

Speaker #3: Thank you.

Speaker #2: Thank you.

Vishal Kampani: Thank you.

Speaker #1: Thank you. As there are no further questions I would now like to have the conference over to Mr. Vishal Kampani for closing comments.

Operator 2: Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Vishal Kampani for closing comments.

Operator: Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Vishal Kampani for closing comments.

Speaker #2: Yes, thank you very much for joining our call, and see you all next quarter.

Vishal Kampani: Yes, thank you very much for logging on to our call, and see you guys next quarter.

Operator 2: Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Operator: Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

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Q1 2027 JM Financial Ltd Earnings Call

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