Q4FY18 results highlights
Valuation and view
We reiterate Overweight on JMF. We expect JMF to deliver strong earnings growth of 23% over FY18-FY20E. We expect RoA to remain strong at 4.4% in FY20E and RoE of 18.6%. Stock trades at 2.1x PBV FY20E. We believe this valuation is compelling for a solid franchise that has delivered 23% EPS CAGR over FY15-FY18 and will likely continue to deliver strong EPS CAGR of 23% p.a over FY18-FY20E, with improving RoEs and sound asset quality. JMF recently raised QIP of Rs6.5bn of which Rs4bn will be infused into the ARC, Rs2bn into JM Credit Solutions and Rs1bn into JM Products. JMF has recently launched housing and SME finance, which will strengthen its lending growth, make the loan mix more granular and provide upside to our growth estimates.
JM Financial Ltd.. JM Financial Limited is a holding company. The Company operates as core investment company. It offers customized financial solutions to a range of client base. Its segments include investment banking and securities business, fund-based activities, alternative asset management and asset management. Its investment banking and securities business segment includes investment banking, institutional and non-institutional equity sales, trading, research, broking and distribution, private and corporate wealth management, commodity broking and portfolio management. The fund-based activities segment includes non-banking financial activities (NBFC) and asset reconstruction. Its alternative asset management segment includes managing funds of institutional and non-institutional investors raised under various schemes for investments. The asset management segment includes managing mutual fund assets through several schemes, offering a range of investment options to investors.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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