ICICI Direct recommended hold rating on JM Financial with a target price of Rs 65 in its research report dated May 12, 2020.
ICICI Direct's research report on JM Financial
JM Financial is a diversified financial group engaged in various businesses providing a host of services including mortgage lending (wholesale and retail), distress asset management (ARC), investment banking, wealth management & securities (IWS) and AMC. Moderation in advances, witnessed in last several quarters, continued further with ~18% YoY decline to Rs 11531 crore. Mortgage book comprised Rs 7342 crore, Rs 3880 crore towards capital markets, corporate/promoter funding. In capital markets, volume stayed healthy with market share in overall ADTO at 0.85% & 2.13% share in cash ADTO. Despite decline in equity markets, AUM of AMC increased in Q4FY20 to Rs 6109 crore, primarily led by accretion in debt schemes, though equity AUM saw a decline of ~42% YoY to Rs 3285 crore.
Hence, we stay cautious on business outlook. Thus, earning is expected to stay muted at ~2% CAGR in FY21-22E to Rs 564 crore. The stock currently trades at 9.5x FY22E EPS, ~0.7 P/BV FY22E. Maintain HOLD with TP of Rs 65 (SOTP valuation).
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