JM Financial increases stake in JMFCSL, its non-deposit taking NBFC arm to 97%

JM Financial gains 2% on stake hike in credit arm

Financial services company JM Financial's shares were higher by above 2 percent on March 26, after the company's increased stake in its non-deposit taking NBFC arm JM Financial Credit (JMFCSL) by 1.38 percent for Rs 41 crore, taking its holding to 97.02 percent.

"The Company’s share in the consolidated profits shall increase and accordingly shall have enhanced control of JMFCSL including capital allocation and distribution of profits," JM Financial said.

Before this transaction, JM Financial had signed a Share Purchase Agreement (SPA) with INH Mauritius 1 to acquire 5.97% of equity share capital of JM Financial Credit Solutions (JMFCSL) for Rs 178 crore. The transactions are part of a restructuring of its subsidiary holdings to improve control and streamlining operations.

JM Financial is also reportedly in talks to invest in a consumer brand backed by Emcure Pharma's Namita Thapar, reported VC Circle. This development is yet to be independently verified by Moneycontrol.

In its Q3FY25 earnings report, JM Financial reported a 21.5 percent year-on-year (YoY) decline in net profit at Rs 70.5 crore. The revenue from operations declined by 3.8 percent to Rs 209.2 crore, down from Rs 217.5 crore in the same period last year.

JM Financial has brought about a strategic shift from an on-balance sheet lending model to syndicating transactions for investors, significantly reducing its loan book across wholesale real estate, financial institutions, and MSMEs. The loan book shrank from Rs 7,529 crore as of March 31, 2024, to Rs 4,207 crore by December 31, 2024. At the same time, the provision coverage ratio for the wholesale real estate loan book surged from 54 percent to 93 percent, even as the gross non-performing assets (NPA) remained steady at Rs 685 crore.

The company's liquidity position improved, with cash and cash equivalents rising to Rs 5,840 crore from Rs 4,769 crore. Meanwhile, group borrowings saw a notable reduction, falling from Rs 16,145 crore to Rs 12,143 crore during the same period.