JM Financial reports 57% increase in consolidated PAT; lending business sees uptick

Financial services group JM Financial Ltd reported a 57.3 per cent increase in consolidated net profit to Rs 55.5 crore for the quarter ended June 30, 2013 over the

year-ago period, with double-digit growth in top-line coupled with flat expenses.

The group saw uptick in its revenue from investment banking and securities business and fund based activities. However, segmental revenue from asset management business (both mutual fund and alternative assets) declined.

Total income increased by 12.56 per cent to Rs 281.9 crore in the quarter with lending business continuing to be the major revenue contributor.

Nimesh Kampani, chairman, JM Financial Group, said, “The economic environment continues to be under stress. In this background, fundraising activity is almost at standstill. M&A activity is also slow given the uncertainty in the environment, along with increased cost of funds tight liquidity in the system. Broking activity is continuously under pressure with reduced volume on stock exchanges and continued skew of activity in favour of future and options trades and against cash trades.”

JM Financial counts San Francisco-based hedge fund Valiant Capital and Wipro promoter Azim Premji among its shareholders. It is also bringing former Citibank chief executive Vikram Pandit as a minority shareholder.

Shares of JM Financial closed at Rs 19.45 per unit, down 1.52 per cent on the BSE in a flat Mumbai market on Wednesday.

Investment banking and securities business

The investment banking business reported a 12.4 per cent increase in the revenue to Rs 116 crore over the corresponding quarter last year. During the quarter, the unit handled QIP issue of ING Vysya Bank and also acted as financial advisor to Cavinkare for an investment by ChrysCapital.

It also acted as the advisor to Aditya Birla Nuvo for the tender offer to public shareholders of Pantaloons Fashion & Retail as part of the demerger of Pantaloon’s retail format business from Future Retail.

During the quarter, it also closed certain transactions announced earlier such as acquisition of stake in United Spirits by Diageo Plc., demerger of non-IT business of Wipro, RHI AG's open offer for Orient Refractories and structuring of 'Trust Mechanism' for meeting the minimum public shareholding requirements in Wipro.

Other business

In the equity brokerage business, the company placed a major focus on advisory based services where brokerage yields are higher. It has a presence in 268 locations spread across 116 cities through a network of branches and franchisees. The wealth management business’ assets under advice stood at around Rs 19,500 crore as on June 30, 2013.

Fund-based activities

Fund based activities in the quarter ended June 30, 2013 were subdued compared with the previous quarter, marking a slow start to the fiscal year for the company. Its funding book stood at Rs 2,780 crore and the treasury book for the fixed income securities stood at Rs 473 crore.

With increased thrust on controlling the rising level of Non-Performing Assets (NPA) in the banking industry, the company is betting on business in the asset reconstruction business going forward.

Alternative asset management

The combined assets under management of the private equity and realty fund stood at around Rs 1,300 crore at the end of the quarter. The revenue from the business reduced by half to Rs 5 crore in the reporting quarter.

(Edited by Joby Puthuparampil Johnson)

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