Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

JM Financial - Stress pool has peaked; earnings buoyed by distressed credit resolutions - ICICI Securities

Posted On: 2021-01-27 22:44:17 (Time Zone: Arizona, USA)


JM Financial (JMF) reported its Q3FY21 PAT at Rs1.81bn, up 15% YoY and ~30% QoQ. Earnings across IWS and mortgage lending businesses were stable (despite provisioning). Overall earnings were buoyed by distressed credit resolutions. ARC contributed Rs210mn to profits compared to
- Proforma GNPAs + SMA-2 + restructuring at 8.6%; 18-20% of loan portfolio to seek DCCO extension: Proforma NPAs were 3.57% (2.13% in Q2FY21) and SMA-2 pool has risen to 6.2% from 2.86% (overlap with proforma GNPL of 1.8%; adjusted SMA-2 at 4.4%). As was guided, the company offered resolution plan (restructuring) aggregating to Rs620mn (0.59% of loans); however, 18-22% of overall lending book would seek DCCO extension. JM has made additional provisions of Rs620mn (guided Rs500mn-550mn), thereby taking the total provisions to Rs3bn - covered to the extent of 5.1% on stress pool of 8.6%. Management has highlighted that NPA and SMA2 numbers have peaked and provisions are adequate for now with no further Covid-related cover anticipated. In NPL accounts, 'loss given default' (LGD) is expected to be Rs300mn-400mn against the provisioning of Rs1.23bn. In SMA-2 accounts, LGD is anticipated at Rs350mn-400mn against provisioning of Rs770mn. Balance portfolio is witnessing strong sales and collections, which is expected to continue in the coming quarters.

- Wholesale mortgages - JMF has started evaluating fresh proposals to build pipeline: Gross loans declined 9% QoQ to Rs104bn primarily as the wholesale mortgage book contracted from Rs84bn to Rs76bn (due to run-down of RMZ exposure post their deal with Brookfield). Sales data for the real estate sector over the last few months has been encouraging and the company expects escrow cashflows to remain strong. It has started evaluating fresh proposals to build a pipeline for gradually increasing the long-term loanbook. Retail mortgages were flat QoQ at Rs8bn and collection efficiency in home loans is at 98%, post moratorium.

- IWS business earnings were flat, driven by fee-cum-fund based income: Revenues (net of interest expense) in IWS businesses were up 4% QoQ/YoY and earnings were flat at Rs910mn. The segment has a robust pipeline of investment banking transactions. However, its average daily turnover declined 10% QoQ and consequently resulted in loss of cash market share to 1.45% (from 1.62% in Q2FY21). AUA (excluding custody assets) of private wealth management business was up 5% QoQ / 20% YoY at Rs567bn. Equity AUA for private wealth management business is sustaining its growth momentum and elite wealth management / institutional fixed income businesses are scaling up. Internal synergies amongst the various businesses are yielding strong results. JMF funded seven public issues (including one NCD issue) aggregating to a funding of Rs252bn.

- Distress credit resolutions buoy earnings: Distressed credit business, as was indicated, witnessed a few resolutions, adding to the overall profitability of the group. During the quarter, JMF closed two deals as part of debt aggregation of one large account. Higher focus on recoveries yielded results and recoveries during quarter were much higher at Rs7.5bn (Rs1.2 bn in Q2FY21). Focus continues to be on recoveries and resolution with a cautious approach towards acquisitions.

- JMF is strategically evaluating synergistic inorganic opportunities, particularly in retail lending or broking. In retail lending, it will look at entities in housing or small-ticket LAP that will help it double the segmental portfolio.

- Company has reduced leverage across segments and debt to equity now stands at 1.1x. Cash and cash equivalents at Rs37bn are higher than total short-term borrowings. It has resorted to CP borrowings whose proportion now stands at 9.2% of the total borrowing (vs 7.5% in Q2FY21).

Shares of JM FINANCIAL LTD. was last trading in BSE at Rs.80.75 as compared to the previous close of Rs. 83.05. The total number of shares traded during the day was 48721 in over 647 trades.

The stock hit an intraday high of Rs. 84.3 and intraday low of 80.15. The net turnover during the day was Rs. 4013057.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Warehousing demand expected to grow around 160% to reach 35 million sq. ft in 2021: JLL

Telecom - Spectrum auction: Prudent investment by Bharti Airtel - ICICI Securities

JB Chemicals & Pharmaceuticals - Analyst meet takeaways - ICICI Securities

IPO Review - MTAR Technologies Ltd - ICICI Direct

Auto Sector - Monthly Volume Round-up - Feb 21 - Decent YoY Growth Continues

Aditya Birla Fashion and Retail - Focus on scaling up new businesses - ICICI Securities

Automobiles (wholesale) - Wholesales push continues despite modest retail trends - ICICI Securities

Aditya Birla Capital - Thoughtful (inclusive) conglomerate business evolution commands premium - ICICI Securities

Jubilant Foodworks - Buying in-the-money options - ICICI Securities

Multi Commodity Exchange of India - Play on rising commodity prices? - ICICI Securities

Gladiator Stocks - Sudarshan Chemical - ICICI Direct

Monthly Commodities Outlook - March 2021 - ICICI Direct

ICICI Direct - Monthly Currency Outlook: Rupee to depreciate further towards 75.00 level...

ICICI Direct - Covid Recovery Pulse - E-way bill generation in February 2021 starts on strong note...

Company Update - Virtual JLR Investor Event - Tata Motors - ICICI Direct

Analyst Meet Update - Aditya Birla Fashion and Retail - ICICI Direct

MTAR Technologies Ltd. - IPO - Huge Opportunities from Clean Energy Bodes Well - Reliance Research

ICICI Direct Derivatives Weekly View (February 26): Failure to move above 14700 may extend declines towards 14300...

Bank: Sector Credit Trends - Slows, Yet again - HDFC Securities

Piramal Enterprises - Pharma day highlights - ICICI Securities

Polymer price tracker - PVC prices rise sharply again! - ICICI Securities

Greenply Industries - Growth returns, at an inflection point - ICICI Securities

Tata Motors - JLR future proofing itself with rapid electric transition - ICICI Securities

Dairy - Higher freight cost and increase in Global SMP prices - ICICI Securities

Analyst Meet Update - Nestlé India (Hold): Focus on product innovation, expanding rural reach - ICICI Direct

MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Rollover Report for February - March 2021 : Angel Broking

Reaction from industry experts on Q3FY21 GDP numbers

M. Govinda Rao, Chief Economic Adviser, Brickwork ratings on Q3FY21 GDP numbers

Mr. Dhiraj Relli, MD & CEO, HDFC securities views on Q3FY21 GDP Growth Number

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q3FY21 GDP

Rollover Analysis - Feb 21, 2021 - YES Securities

Consumer Durables - Demand-driven recovery continues - HDFC Securities

Cement - Demand surprises; earnings upgrade to continue - ICICI Securities

Gladiator Stocks - TeamLease Services - ICICI Direct

Gladiator Stocks - Metals to outshine post multi-year breakout... - ICICI Direct

Company Update - Sundaram Finance - ICICI Direct

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct

Q4CY20 Company Update - Mahindra CIE Automotive - ICICI Direct

Event Update - Hindalco - ICICI Direct

EY report launch at BioAsia 2021 - Moving the needle: Healthcare industry in a post-COVID world

Initiating Coverage - Dalmia Bharat Ltd - HDFC Securities Retail Research Desk

Initiating Coverage - Mastek Ltd - HDFC Securities Retail Research Desk

Hindalco Industries - Status quo maintained - ICICI Securities

Tata Motors - India business scaling in the right direction - ICICI Securities

IPO Review - Heranba Industries Ltd



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020