‘We aim to generate at least 50% of our revenue online in 7-8 years’

JM Financial turns 50 this year. Where is the business positioned for growth today?

Well, it has been a journey of sustainable value creation based on strong fundamentals through which we have emerged as a diversified financial services conglomerate. We are in an amazing phase right now, as our Investment Banking, Mortgage Lending and Asset Management, Wealth Management and Securities (AWS) businesses are seeing strong growth momentum and activity. Our Alternative and Distressed Lending business posted record profitability last year on the back of strong resolutions. We continue to focus our attention on resolution of existing assets. As banks and other financial institutions continue to clean up their balance sheets, our asset reconstruction business will see upside. In addition, we are investing heavily, primarily in people, technology and infrastructure, with our continued focus on tapping the multi-decade opportunity before us. This is an interesting phase for the economy. After firmly putting the pandemic and other challenges behind, companies are now tackling the challenges of growth. In this phase of our journey, the emerging opportunities are in real estate and capital markets which are generally bank constrained. At JM Financial, we are focused on Real Estate and Capital Markets. We see huge opportunities for growth in both the lending and advisory businesses. Real estate and capital markets are expected to grow at a rate higher than the rate of GDP growth over the next decade. In fact, these sectors will emerge as major growth drivers for the economy.

Keeping in view the global macroeconomic scenario, how do you expect the Indian economy to fare? Can India take advantage of the dislocations in the global economy?

We firmly believe that this is India’s decade. Due to strong gross domestic savings and low corporate debt-to-GDP ratio, corporates are in the pink of health. With continued clean-up, the banking and non-banking systems are well capitalized and credit growth is strong. I believe the corporate investment cycle will pick up, as the domestic market is growing at a faster pace than other emerging markets. With sectors such as manufacturing and defense expecting a substantial increase in exports on the demographic dividend, the government’s focus is on strengthening transport, communication, digital and logistics infrastructure. Having said that, the pace of growth will not be limited to a certain region, as the overall outlook is extremely strong. The economy is firmly on a growth trajectory in the medium to long term, taking into account market and interest rate volatility.

How does JM Financial want to capitalize on this opportunity?

There is a sharp focus on driving sustainable growth for all of our businesses. For our Investment Bank business, we made strategic investments in product development to enhance our product pipeline. We have also expanded our client base as a part of our aim to diversify our revenue generation strategy, which is not tied to one large client and is a well dispersed one. As a result of our strong product development strategy, our diversified product portfolio includes investment grade debt capital market instruments, structured and bespoke financing and wealth management solutions for our ultra-high-net worth clients, and portfolio management services and private equity funds . In addition to financial solutions for NBFCs, securitization, co-lending models, etc., we are looking forward to collaborating with NBFCs with strong credit leverage and stable growth outlook to leverage each other’s strengths.

Thanks to a structured approach, the Investment Bank business has been operating in a consistent manner, deepening the company’s client base by encompassing multiple corporates, institutions and with diversified product offerings.

Mortgage lending is a big part of JM Financial. How is that business doing?

In mortgage lending, we have regained the growth momentum. Our total mortgage lending book, wholesale and retail combined 9,500-10,000 crores and is expected to increase 15,000 crores in the next 15 months. In Q2 FY23, JM Financial’s consolidated loan book stood at 14,670 crore, a growth of 32.50% YoY. With JM Financial Home Loans expanding to 75 branches, our retail mortgage investment continues and is expected to grow at a rapid pace. We have achieved significant profitability in the mortgage lending business. Even with the impact of Covid and all provisions, the business registered profitability and is expected to demonstrate strong profitability over the next 24 months.

How JM Financial plans to tap the digital opportunity?

We are bullish on our AWS platform, a robust technology-led platform on which we are developing our digital backbone for broking, asset management and distribution of financial products. In addition, we are working on developing a digital platform for Franchisee, Direct and Mobile Broking. We have plans to digitize all financial products and distribution of mutual funds to conduct business online. We aim to generate 50% of our revenue from online in the next 7-8 years. We plan to base Platform AWS in Bengaluru and/or Pune and the tech hubs and talent of these cities will help us build a strong platform, which is critical to the efficient operations and performance results of the Platform AWS business. , We will continue our strategic investments in the Platform AWS segment through additional hiring, development of a robust digital marketing model, and a digital-friendly physical infrastructure.

2022 was a volatile year for equities. Are things looking better for the market in 2023?

As per my knowledge, many fund managers are in the process of raising India dedicated funds, Asia funds excluding China with 40-50% weightage to India. Hence, capital will continue to flow into India. Hence, in the next six months, the trend may reverse and foreign portfolio investors (FPIs) may become net buyers. However, the markets will remain in a range. We are already in the mid to advanced phase of the rate hike cycle. Commodity and oil prices are showing signs of cooling. You haven’t seen the recovery because of strong domestic inflows and companies in India are doing very well. They may be guiding to lower profit but they are still guiding to growth. Markets are on a good track. The only thing to look at is CAD.

How have the Covid times changed things for you personally?

From March 2022 we are working in the office. In the office, the atmosphere is more exciting and charged with frequent strategic collaborations and interactions with colleagues and clients. In the post-pandemic phase, communication and meetings with customers have become hybrid due to technology-led convenience and efficiency. Therefore, the attitude towards business meetings has changed.