JM Financial Limited (NSE: JMFINANCIL) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Vishal Kampani — Managing Director and Vice Chairman
Nishit Shah — Group Chief Financial Officer
Sonia Dasgupta — Managing Director and Chief Executive Officer – Investment Banking
Dimplekumar Shah — Managing Director & Co-Head – Equity Broking Group
Chirag Negandhi — Managing Director
Amitabh Mohanty — Managing Director and Chief Executive Officer – Mutual Fund
Anuj Kapoor — Managing Director and Chief Executive Officer – Private Wealth & Alternatives
Unidentified Speaker
Analysts:
Digant Haria — Analyst
Himanshu Upadhyay — Analyst
Chintan Shah — Analyst
Kshitij Saraf — Analyst
Unidentified Participant
Rishikesh Oza — Analyst
Dhruvesh Sanghvi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to JM Financial Limited Q3 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star than zero on your touchstone phone.
Kindly note that any forward-looking statements made on this call are based on the management’s current expectations. However, the actual results may vary significantly. And therefore, the accuracy and completeness of this expectations cannot be guaranteed. Please note that this conference is being recorded.
I now hand the conference over to Mr. Vishal Kampani. Thank you, and over to you, Mr, Kambani.
Vishal Kampani — Managing Director and Vice Chairman
Thank you. Thank you. On behalf of JM Financial, we extend a very warm welcome to all of you through our earnings conference call to discuss results for our 3rd-quarter and nine months ended December ’24. Our results have been uploaded, presentation, press release, all of it on the website and stock exchanges. I hope you have had a chance to go through the same.
On the call, we also have Mr. Chirag Negandhi, Managing Director of JM Financial Limited; with Sonia, Managing Director and CEO of Investment Banking, JM Financial Limited; Manish Sheth, MD and CEO of our Home Finance business; Dimpal Kumar Shah, MD Co-Head of Investment Advisory and Distribution and Retail Broking; Amita Mohanti, CEO of our Mutual Fund and Asset Management business; Anush Kapoor, Head of the entire Private Wealth business; and Nishit Shah, our Group CFO. I will give the key updates and hand over the call to Nishit and the management team to take you through the numbers.
As discussed in the earlier calls, we have taken a strategic decision to refocus our expertise in the wholesale credit business by pivoting from an on-balance sheet business model to syndicating transactions to investors. By way of an update, the loan book across wholesale real-estate, financial institutions and MSME has run-down from INR7,500 crores as of, 31 March 2024 to approximately INR4,200 crores as of December 31, ’24. This represents a decline of 45% over the last nine months. The loan book of INR4,200 crores carries a provision of approximately INR800 crores, which represents 19% of the loan book.
The provision coverage ratio on the real-estate loan book has increased from 54% as of, 31 March 2024 to 93% as of December 31 December 2024. Gross NPA numbers for the wholesale real-estate loan book has remained stable at INR685 crores as of December 31, 2024.
Cash-and-cash equivalents have increased from INR4,769 crores as of, 31 March 2024 to INR5,840 crores as of December 31, ’24 and Group borrowing has reduced from approximately INR16,145 crores as of, 31, ’24 to INR12,143 crores as of December ’31, ’24.
Now coming to an update on our focus businesses that include Corporate advisory and Capital markets. This includes the investment banking and equities business. The pipeline of transaction continues to remain very strong, and we are happy to report that we stood as number-one in KYP deals done in calendar year ’24.
On Wealth and Asset Management, the AUM of our wealth business stood at INR1,10,000 crores, an increase of 17% Y-o-Y. Our SEBI margin finance book saw an increase of 38% Y-o-Y with approximately INR2,100 crores and our mutual fund AUM grew 3 times and is now approximately INR13,800 crores. The closing — the closing AUM of equity mutual funds has crossed an important milestone of INR10,000 crores.
Private credit syndication, the business is in a transient phase and with on-balance sheet loan book reducing, but happy to report the pipeline for syndication transactions is building up well. On affordable home loans, we have expanded to 128 branches. We have an AUM of INR2,600 crores, the 33% increase Y-o-Y. The net-worth in the business now is at approximately INR780 crores. In addition to the above, the treasury/surplus assets as of December 31st are at INR6,618 crores.
With that, thank you, and I’ll ask Nishit to take you through a few of the numbers and then we open up for questions.
Nishit Shah — Group Chief Financial Officer
Thank you, Vishal. During the quarter ended December ’24, our revenue stood at INR1,121 crores. Profit-after-tax and after non-controlling interest for quarter three FY ’25 stood at INR209 crores. For the nine months ended December 2024, our revenue and PAT stood at INR3,426 crores and INR612 crores, respectively.
The gross NPA on the overall loan book for the quarter ended December 2024 stood at INR838 crores, which is flat as compared to INR835 crores as of quarter ended September 2024. The provision on gross NPA has increased to INR701 crores as compared to INR588 crores for quarter ended September ’24.
The incremental provision of INR113 crore has resulted in the provision coverage ratio on the overall gross NPA to increase from 70% to 84% as of December ’24. These provisions have had an impact of approximately INR43 crore on profit-after-tax and after non-controlling interest for the quarter ended December ’24.
The consolidated net-worth, excluding non-controlling interest stood at INR8,874 crores, which translates to a book-value of INR92.8 per share. On a consolidated basis, gross debt-to-equity stood at 1.1 times and cash-and-cash equivalents stood at INR5,840 crores.
With this brief update, I would like to hand over the call to the moderator for further questions.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles.
The first question comes from the line of [Indecipherable]. Please go-ahead.
Digant Haria
Good morning team and thanks for the opportunity. My first question is because we’ve started reporting two formats, one is the focus business and one is the regular old format. I just wanted to check that the investment banking revenue, it looks like we have declined Y-o-Y. Is it largely because of our loan books running down, especially on the capital market financing, FI financing, is that impact there?
And if you can just say that you said that in QYP, we have been the number-one bank, but like did we lose out on some IPOs or some deals because we had some regulatory action or restrictions which happened in March last year. If you can just quantify in terms of market-share and where have we been? And was there any handicap because of that and like do we do better in the coming years? That’s my first question.
Vishal Kampani
Yeah, let me just start and I’ll hand over to Sony on the specifics of investment banking. So the format — reason we have two formats is because we will be moving to the new format, Digan, from next year in June quarter, but we want investors to have a comparable number available to them next June and therefore, we’re reporting the new format right now.
And also, we want to continue with the old format, so people can compare from last year to this year how the businesses have moved. So it’s just being more transparent and giving more disclosure. In the new format, there is no earnings from any loan business in the Corporate advisory and Capital Markets segment. So it’s purely the investment banking segment, which is reported and the Institutional equities segment, which is being reported.
On the specific question of Investment Banking, Sonia will take the question.
Sonia Dasgupta
Yeah, hi. In terms of investment banking, our market-share will any given year will be anywhere in 15% to 12% on the capital market side. M&A yields are lumpy. So this year, we would be among the Indian banks the number two in M&A and period oil.
Regarding the impact of the SEBI order, which came specifically for managing debt, a public issue of debt, but there was a lot of misunderstanding among the client and therefore, you are right, it did impact our equity business and we may have lost out on some large deals. But subsequently, in a subsequent classification made it very clear in writing that this was only applicable to debt IPOs. And thereafter having been clarified, I think we are now — there is no ambiguity about any negativity on our equity capital markets business.
Digant Haria
Okay. Okay.
Vishal Kampani
Because simply put, the order came sometime in the first week of March. So March-April if we lost a couple of transactions, those transactions would have showed up in terms of execution in October, November, December.
Digant Haria
All right. All right.
Vishal Kampani
Yeah, contribution timeline for a transaction is six months. But having said that, the market-share is still very good. It’s very rich. The pipeline is very, very strong. And in this business, you’ll win a few, you’ll lose a few. As long as the growth is there on an annual basis, that’s more important to track.
Third, investment banking, it’s very — it’s very difficult, as you know, to predict quarter-on-quarter growth because sometimes your deals slip. So sometimes a deal which is supposed to happen in December, two or three deals can slip to January, February. Third, just seasonally, it’s been challenging to push all transactions through in Q3 because there has been softness in the markets and also softness in terms of what valuations investors are willing to take for issuers.
Sonia Dasgupta
Yeah. Having said that, we have a very strong pipeline of DRHPs that are already filed, which is in the public domain. We have close to two-dozen filed. Subject to-market conditions, we should be able to launch them and we are also in the process of filing equally — equal amount of the RFP.
Digant Haria
All right, all right. Yeah, thanks for that clarification, Sonia and Vishal. My second question is now on this mortgage-finance or the JM Credit Solutions NBFC, our NPAs have been steady at that INR650 crores or INR650 crores to INR700 crores kind of a range, but we have been making provisions almost say INR80 crore to INR90 crores a quarter run-rate for the last six quarters and our PCR has gone up to 90%, 95%. So Vishal, you can just give some color like are we preparing for some write-offs here or if we think that some assets may not reach resolution or no.
Vishal Kampani
I think — no, I think because we’ve already, as I clarified even earlier that whatever write-off we needed to take on these assets has already been taken, large amount of the write-offs has been taken last year. So this is the net value. The cover on these assets stands well in excess of 1.3 times to 1.4 times post the write-off. The provision is being done because the loan book is coming down so fast, right? And therefore, the numbers — the net NPA numbers look very large.
So instead of if the loan book keeps coming down and the estimated time to resolve these assets say is four to five quarters more, right, then what happens, we don’t want to take any provisions next year when we are — from June onwards, when we are going through this new sort of four segments of business where we don’t have wholesale credit as a business to report, right? So therefore, it’s very important that we take all of the provisions upfront. And to add to that, it’s also a very strong countercyclical measure.
So it’s good to have complete provision. I mean, we can’t even provide more, right, because we’re almost now at, 90% 95% on the wholesale real-estate book at Max, we can do is the balance 7% in March, which is not a big number again. So I think it’s just good to clean it up, have a 100% provision, have a very conservative sort of balance sheet and we are good to grow on the syndication side very shortly. And those numbers will look even more exciting for the next two years once the growth comes on the syndication side.
Digant Haria
Perfect. Perfect. So Vishal, if I understand, the IV business now has absolutely no handicaps because last year there was a handicap of that regulatory overhang and this entire credit solutions piece can actually start giving us write-backs because at 100% provision cover, the only thing that can happen is write-backs, right, if things go well. So both those businesses should do.
Vishal Kampani
Exactly. That’s exactly the point. Also, the right — the provision is happening when our ownership in the business is 46%, we are waiting for the RBI orders to come through. We already have the RBI approval to buy the ARC in the credit solution and we are hoping that this quarter RBI will give us the approvals to take control of credit solutions. So the write-back will happen when we have 90% ownership.
Digant Haria
Perfect, perfect. That’s great, Vishal. And then last question is just on this entire platform AWS business. So because the markets have been volatile and probably they may be slow for another three, six months or whatever, we have not you know, we have not reduced or not going slow on any of our investments in digital or team building in the wealth/IB side. We have been doing like we’ve not just stopped the pedal on any of these, right, or?
Vishal Kampani
No, we haven’t, but I’ll have Chirag and team take that question.
Dimplekumar Shah
Yeah. So actually, here. We’ve actually been a little bit more aggressive. We’ve actually found it as an opportunity where, you know, some of the competitors have been disrupted, whether it is on the equity side or on the wealth side, and we’ve actually used this opportunity to go and get some top-quality talent. And that you will see going-forward helps all aspects of the business, even on the equity side, besides the secondary markets business, it will also help the procurement in the equity capital market business, which will — which you then start seeing subsequent improvement in the market-share as well.
So no, to clearly answer your question, we’ve actually gone more aggressive. We’ve seen opportunities and we’ve seen this at the time when we’re getting good-quality people and we’ve actually used this as a time to boost our talent.
Digant Haria
Perfect, perfect. Thank you. Thank you everyone for the answers and all the best. Thank you.
Vishal Kampani
Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Himanshu with BugleRock PMS. Please go-ahead.
Himanshu Upadhyay
Yeah, hi. It’s somewhat follow-up on what Digant asked. I see in the investment banking and let us break it into some segments where we have done well and where the revenue is lagging, okay? So can you give some thoughts on that? Because when we look at investment advisory, it seems it has done good or corporate advisory part revenue. But again, we don’t have any Y-o-Y part. So some color on which segments have lagged and which segments have done well on the investment banking side means in — because overall, it seems like a degrowth of 11% Y-o-Y and again, Q-on-Q also a similar form, much bigger fall, okay. So how should we understand where we are or where we lagged in this year or in the 3rd-quarter?
Vishal Kampani
Yeah. I think you are looking at the old segment in which…
Himanshu Upadhyay
We hit Slide 32.
Vishal Kampani
Yeah, it goes there. That is the old segment. So in the old segment, we had the financing revenues also as part of the investment bank and that financing book has decreased a lot. As you have seen, the financing book has gone down by almost, you know from 33% to 34% in the last one year. And therefore there is a decline in the investment banking segment. So I think the right way to look at it is the — this quarter and how we’ll perform next quarter. And Sonia, you want to add-on segments within investment banking, how we’re looking at them in terms of growth and in terms of market-share?
Sonia Dasgupta
Yeah, sure. So the pure investment banking, which is the advisory — the capital markets and the advisory firms M&A and PE, they have — you know, we have grown year-on-year. The booking of the revenues is always a fastest close-in a particular quarter and how we book the revenue. But otherwise, there has been a secular growth quarter-on-quarter. Depending upon you know, because a lot of it is dependent on the segments.
So for example, there are some of the transactions which we have in specific deal financial services, which we can’t launch because microfinance is under stress. So those deals while we are mandated, we have VR HPs, which are — we have not been able to launch them. But certain other segments for example in healthcare or real-estate, which we have — we have launched them and we will see the revenue being booked.
Having said that, I think we will be — we have a team which will cover all segments, whereas industrials, consumer, healthcare, financials, we will be a team that will be focused on every segment. Our enhanced focus will be on cross-sells to make sure our clients get the benefit of our entire wealth franchise also and the wealth clients get the benefit of our investment bank.
And also our entire syndication. So we are just looking to make sure that the investment banking team remains the ulcrum through which we are able to deliver every product of the integrated investment bank, be it debt capital markets in terms of syndication or as well as our own wealth franchise.
Himanshu Upadhyay
Thank you. Okay. And I had a question on affordable housing. In Q2, we stated that we had a INR150 crores of BT, okay. It’s a basic question. How much was this quarter? And secondly, we were planning to sell-down opportunistically every quarter-on-quarter. In case a person comes down for renegotiating a REIT or BT in sell-down book, can we renegotiate on the rates or not? If yes, then who takes the NPV loss of lower yield? Does it get shared or some thoughts on that how it happens?
Nishit Shah
Yeah. So BT rate continues to be 1% a month. It was last year 1.5% a month, meaning 18% a year was a busy out. That has come down a bit. It is like 1% a month. To answer your second question, when you sell-down, actually risk and written goes to the extent of sell-down, for example, under a 90, 10 deal, 90% of the risk and written goes to the person who buy this portfolio. And in those cases, you cannot change the rate unless you take the approval of the buyer. And if you change the rate with the approval, obviously this benefit or that goes in the same ratio of 10 to 90, which is a true self consent.
Himanshu Upadhyay
So okay. Okay. Thanks for that clarification. Okay. And one thing, Vishant. We are — on the real-estate segment, okay, what — how is the demand from — for credit by builders because what we are seeing is the launches are — the inventory — launched inventory is now becoming more than the absorption which is happening, okay, in-markets and unsold inventory for many of the players is unsold under-construction inventory is starting to increase for many players. So what is the scenario?
And secondly, the — how are till the time approvals come and we start our AIF funding, how do we maintain our relationship with the builders with which we have passed done business and keep our teams also gainfully involved and motivated. Some thoughts on that business because at the end, it has — it will restart at some time and what we are doing there.
Vishal Kampani
Yeah. So I’ll start with the last question first. Part of the team has already moved from our NBFC business to the asset management side. They’ve already full-fledged working on the application for the AIF, which should happen hopefully by next quarter. On the real-estate side, we have an extremely strong equity and debt franchise. So many of the players are anyway engaged with us on the equity side to raise some form of capital.
On the debt side, we still have a book that is running down. And these are very old relations. Everybody has been spoken to and we’ve told them that we actually want to focus on land and approval finance through an AIF structure. And people who we are speaking to, clients who we are speaking to are very excited. In fact, they are keen that it’s set-up fast sometime in this year and that we are able to move ahead with financing them. So I’m not concerned at all about those relations. So I think they’ve been there for more than almost two decades and once the AIF is up and ready, I think we’ll start doing business very soon. So not much of a concern there.
On your first point, yes, there is definitely some concern coming up in terms of inventory levels rising. We hear from some of the unlisted midsize players that sales also have gone down in the last quarter, even the season, the Diwali season was not great in terms of sales. Having said that, there is a market-share shift, which you know, we’ve talked about for the last three, four years, even longer five years that the larger players will get more market-share. And so that kind of slowdown in terms of sales is not visible the larger players.
But one has to check how much of inventory booking is actually happening with brokers versus real sales in some parts of India. People could report very strong numbers, but we have to understand whether they are real sales or right now it’s inventory booking like auto companies do with their dealers and sales will happen onwards over the next three, four quarters. That will give you a better sign-on how listed companies are doing.
But having said that, I think the demand for real-estate still remains strong. A lot of the inventory that comes as total inventory in terms of calculation is not ready inventory. It’s new launches. So as long as the economy is growing and we are at a healthy 7%, 8% growth. It will flatline prices and sales will take maybe a few quarters delay to pick-up. But anyway, I don’t think it’s an alarming level. It’s not something where you will see a ILFS or a pre-ILFS kind of prices where sales were very, very slow and it really impacted the sector.
Chirag, you want to add anything on real-estate besides.
Chirag Negandhi
You can cover it all.
Vishal Kampani
Yeah. Okay. That’s it.
Himanshu Upadhyay
So have the yields increased and are we seeing increased demand from the builders now? It’s — on the wholesale side?
Vishal Kampani
So see builders will always have demand challenge is that as per the new regulations last couple of years, we can’t cater to the demand as NBFC, but I always maintain that real-estate is one sector which always needs money, whether it’s debt, whether it’s equity, whether it’s structured credit, they always need money. So the demand is always there, it’s just what kind of demand.
So construction finance, particularly the drawdowns have been slow and the drawdowns are always slow when sales are very strong. Another reason why our loan book has run-down so fast is just because sales is very strong. And once you — once a project matures and is roughly 30% or 40% sold, that’s when banks come and take-over the project at very, very low yields. So we’ve seen that happen.
Bulk of the rundown and we faced in the book is also because sales have been strong and banks have taken over most of those loans which were originally made-for land and approval and then into construction. So the cycle has been tremendous last two, three years. And because of that, even the lending rates, frankly were very low. I mean, the risk-adjusted rates to lend to real-estate last two, three years have not been very attractive.
So having said that, there is a big gap today in the market for land and approval because there is no bank, there is no NBFC who’s funding it. And these were the largest players giving money for land and approval. So there is a huge opportunity for the AIF. We are just looking-forward this year to set it up and be sort of ready by the end-of-the year to start deploying money.
Himanshu Upadhyay
Yeah. And see the NPAs which are there on this book, wholesale book, okay. And some of these have been with us for more than six months, nine months, okay. Yeah. And the times are good, okay, whatever we give and say you also stated, how — what can we do to hasten our resolutions, okay? And what are the pain points still there even in good markets to resolve these assets? Some of your thoughts will be helpful.
Vishal Kampani
Yeah. See, bulk of the challenges are where we are working with the landowners or the project owners to find a solution which works for them and works for the new buyers to come in. I think in almost 50% of the portfolio, we are pretty much in advanced-stage. So when I say advanced stages, we should see resolution this calendar year. And in the balance 50%, we should see it in the following calendar year.
So one of the reasons, if you go back to one of my earlier calls, one of the reasons we also feel that in real-estate, the risk-adjusted return needs to be calculated properly is because the resolution timelines in distressed assets in India are far longer than what most people estimate. So what happens is when an asset goes bad, you have a liability in your balance sheet, but your asset is not paying-off and your asset has a delayed resolution timeline, which eats into your returns. And if that is not appropriately priced in to the risk when you make the loan, then you have lower risk-adjusted returns.
So that is what you are seeing that most of these six to nine-month old MPAs will take between two years to three years to resolve. But we are fairly confident that this provided amount, I mean, most of it, I would imagine between 80% and 90% of it should be back within the next two years because there are some cases where we’ve tried to do a resolution with the developer with the best effort. And if that is failing, then we are going to NCLT. But once you go to NCLT, you start the IBC process, you know-how it is. It’s a minimum — minimum 18 month process till you get your money back.
But to watch it’s fine, right, because we’ve had enough of profit in our capital markets business. We’ve used that to take provisions up to almost 93% and if required in the real-estate book, we will take it to 100% in March. So it’s completely cleaned up. And whenever the write-backs come, which they will come in the next two years to three years, you know, we will be happy to receive that. For example, there has been such a phenomenally positive development for us in our largest asset in our ARC, which is Unitec, which happened last week, where after almost a 3.5 year time-frame the Supreme Court has said that you know the management of Unitec and the lender should sort of sit-down and agree to a one-time settlement, right? So that is a — that’s an excellent development. So these things take time.
Now in Unitec’s case, our most conservative estimate is that the value of the underlying assets that we have are probably in excess of INR2,000 crores because all of those lands have appreciated, the loan was made six, seven years ago. You know the accrued value to us is in excess of INR1,000 crores and so — and we have security of INR2,000 crores and none of this is even accounted in our books because we’ve just been providing and we’ve taken the carry value to below INR500 crores. So I think you just have to be patient and work with some of these assets. As long as you’ve underwritten it very well, you have your mortgages in-place and you have those lands or those projects complete control, I think you will recover your money. It’s just about playing that patience game in India.
Operator
Thank you. MR., please rejoin the queue for more questions. Next question comes from the line of Chintan Shah with ICICI Securities. Please go-ahead.
Chintan Shah
Yeah. Hi. Thank you for the opportunity. So sir, firstly on the ARC business, so I think we had some good recovery from the ARC business for this quarter of around INR1,129 crores recoveries were there. So what would be this recovery largely from?
And secondly, I believe ARC is now a defocused business. So incrementally, we won’t be adding much assets to this pool, right? Yeah, is that the right assumption?
Vishal Kampani
Yeah. So ARC, as I told you the earlier also, the ARC recoveries are lumpy in nature. So you will have — you may have a quarter or two quarters where you don’t have a lot of recovery and then you may have a quarter, which is a very, very good because — and you have tons of assets coming through and cash-flow coming through.
So what we have said in the past as well is that we are not going to be taking a turnaround risk in corporate assets as an ARC. The intent of an ARC when RBI gave the license was that banks can sell their NPAs and ERCs along with their own collection networks can collect on those NPAs. And third is ERCs is a very good vehicle to get foreign investors to partner along with you and purchase many of the corporate assets and then work around a turnaround and sale. Earlier, and the third option was ARC puts our own balance sheet to work and works on turnaround.
So we’re going to stop the financing of projects or a takeover of assets where we have to be responsible for the turnaround. So the only two businesses we will do in the ARC will be a the syndicated business where we will partner with corporate. So we will partner with foreign funds who want to take-over assets where our commitment will not be more than 15% and we can go down to as low as 2.5%. So it will be between 2.5% to around 15%. And we will do a syndicated business where we will bring these corporates and these funds and buy assets and we’ll make fees on it.
And the second business we will do is we’ll buy retail assets where we will partner with collection agencies or in some cases, even the issuing company, the selling company to resolve the retail NPAs. So that’s the strategy. So we have — we have added an asset on the syndicated side this quarter — but we don’t have any responsibility for turning it around or operating it. We are very, very clear that we will not take that responsibility like we have in the past.
Chintan Shah
Yeah. Sure. So also I’m just assuming how do we go — how much could be the — so for example, when you told that united, we have a security of around INR2,000 crores and INR1,000 crores-odd probably we could recover just guess estimate on that. So how much will that turn into profitability since even after recovering around INR1,100 crores, it doesn’t seems to flow-on the bottom-line. So how do we read that, yeah. Is that a part of wholesale business or how is it here?
Vishal Kampani
Yeah. So what happens is in Unitec also, for example, we have a — we’ve bought the SR from HDFC Limited. So all these recoveries at 1,100 that you see is all with the partner banks. So the 1,100 recovery is not a balance sheet recovery. Our hold generally in these assets will be between 2.5% to 15%, 5% to 15% actually in the older assets. So our recovery is usually in the 5% to 15% share of the same.
In Unitec’s specific case, because we had given priority loans, the recovery amounts will be higher. It’s very hard to estimate what that will be and that is exactly the exercise we will carry-out with the management of Unitec depending on what their strategy is for liquidity for financing some of their projects. But the overall — overall amount due to us is over INR1,000 crores. There’ll be a share between us and HDFC, but the value of the security today in that portfolio is above — is above INR2,000 crores is our view.
Chintan Shah
Sure, sure. And sir, so on the cash pool, which we currently have, we have a cash pool of roughly around INR5,840 crores as of now. And considering that we are probably done with the transaction of payment which is pending to the credit solutions shareholders and ARC transactions, both these are done with — so where do we think we end-up on the cash balance by March ’24, assuming that those transactions are over by that time. Yeah.
Vishal Kampani
Yeah. So I — the net impact of that will be around INR600 odd crores, and — but the gross sort of outflow from the group will be around INR1,300 odd crores, INR1,400 odd crores, yeah. So the cash will go down on INR1,400 crores from sort of the group, but the consolidation increases because our ownership goes from 45% to 90 plus percent in current solutions. But the net impact on the holding company will be lower in terms of its cash going out because the purchase of the ARC will happen with the use of credit Solutions cash. So from your perspective on a gross level, it will be a reduction of approximately INR1,400 crores, which will take us to between 90% and 95% ownership.
Chintan Shah
Sure. So once both these transactions are done with then probably we are not left with any transaction, right? So then anything on the cash distribution part or dividend or buyback, anything we are looking to do. I mean or would we be — would we keep on — would we keep on holding the cash with us on a treasury book? Yeah.
Vishal Kampani
So as I said that the cash on treasury is going to be used for investing and expanding the businesses of the Group, it also will be used to build a bigger syndication business. So we will use treasury and drive it to bolster our business. But the returns from the cash that we make every year, we will use that as per regulations allow us from RBI to pay dividends. But to do all of that, first, we need to purchase credit solutions because a significant amount of our cash, almost INR3,000 crore-plus sits in their entity.
Chintan Shah
Sure, sure. Okay. Thank you. That’s it from my side, sir. Thank you.
Operator
Thank you. Next comes from the line of Shitesh Sharaf with Tusk Investments. Please go-ahead.
Kshitij Saraf
Hi, good morning. Thanks for taking my question. Just wanted to know on the private wealth side, our ARR AUM is up 33% Y-o-Y. This kind of slightly lower than industry, if you will, it’s been and on a low-base. So just wanted to understand because we’ve increased our RM count from 36 to 54 Y-o-Y. So is there some impact of weaker IB sort of disrupting the flywheel here?
Vishal Kampani
Chirag [Indecipherable] you can take this.
Chirag Negandhi
Sure. So I think especially in the quarter that’s gone by, the mark-to-market impact has actually been slightly overwhelming. We have actually added net-new money of about INR6,000 crores in assets. Our entire — but the mark-to-market impact has negated pretty much 90%, 95% of that. Our entire focus is to really as we are scaling up this business bottoms-up focus on the recurring asset book. And as you see, that is growing at a fast clip.
In terms of the RM count as well, we’ve added about eight to nine RMs this quarter, but you will see that scaling up in the coming quarters as well. So yes, going-forward, with the addition of RMs, both in the MASA affluent as well as the ultra-high net-worth and family office businesses, we do expect the asset ramp-up to happen quicker.
Kshitij Saraf
Understood. And on the investment banking side, we haven’t had large deals this quarter and there don’t seem to be any very large deals in the pipeline. So any sort of outlook you’d want to share there and sort of with the RBI overhang now behind, are we pushing more on the larger deals which come through.
Vishal Kampani
Sonia?
Sonia Dasgupta
Sorry, I don’t know why you say that we’ve not been the because we have filed HDV, which is a INR12,500 crore IPO, as you know, one of the largest deals in that sector. We closed one of the largest M&A transactions from on the PE side where Shriram sold the housing finance asset, which is the largest deal by in the history of their investments of the last 20 years.
So, like Vishal explained, there will always be deals which will be captured and will be missed because there are just so many transactions. As you know, there have been 91 IPO that happened last year and our market-share will consistently remain in the 15% to 20%. So I think like I said, we have filed DRSPs which are in the public domain, which around two-dozen and we have an equal number which we have mandated and hope to file. So the momentum remains strong. The sectors — which deals we launch will be a function of which sectors are favored by the markets and our focus continues to remain on both our ECM M&A as well as cross-sell of our entire platform of every product on our platform.
Kshitij Saraf
Okay. That’s helpful. Thank you. Thank you all the best.
Operator
Thank you. Next question comes from the line of Ashwini Damani with Modify. Please go-ahead.
Unidentified Participant
Hello.
Vishal Kampani
Yes.
Unidentified Participant
Am I audible?
Vishal Kampani
Yes, yes, please go-ahead.
Unidentified Participant
So the bulk of our future business now depends on the investment banking mix. That is where the bulk of our revenue is also coming into profitability. Could you give us on a going-forward basis some insights into how the deal pipeline looks like? And so today, there might be view that to be around the top of the cycle, but probably from your end, you are better aware of the number of IPOs and QIPs that are about to be launched in the next three, six, one year basis. So if you could give that going-forward, that would help us in understanding where our future lives. And maybe some comments.
Vishal Kampani
I’ll pass it to — I’ll pass it to Sonia and both to separately take that question. But I don’t think our business will be concentrated as much in investment banking. I think investment banking obviously is doing very well because of the issuance activity. There are a lot of investments being made in other parts of the business, which Sonia and Chirag will talk you through. I think it will be a pretty much a well well-diversified sort of earnings stream that you will see. But if there is a deal activity in investment banking, which happens, obviously, it increases the profitability. But as I said, it will be more diversified.
Unidentified Participant
Sure. And one more last question, sir. I think the treasury asset now…
Vishal Kampani
Can you just answer it properly and we can go to your next question.
Chirag Negandhi
Just to add to what Vishal said, I think you’re — the focus really is also on the flywheel here. There is a big build-out happening both on the private wealth, in the retail broking and as well as in the equities part. And the impact and the upside of all of this, we will start seeing in the coming quarters. So while the leadership in investment banking is maintained and built on the impact of the investments in some of these businesses, you will start seeing the positive impact of these investments.
Unidentified Participant
Sure. Thank you, sir. And sir, you mentioned that we will — on the question by the previous speaker on distribution of cash, you mentioned that you will redeploy it in new businesses. So would the loan syndication business, etc, require that large an amount of infusion, INR5,000 INR6,000 crores?
Vishal Kampani
Yeah. Yeah. So we’ve given the approximate a breakup, I think last quarter or the quarter before that, I think we’ll need approximately INR3,000 crores of a book that we will maintain on the — on the corporate syndication side, which is the bespoke finance business. And I think we will — our loan again share book will scale back to an equal number of around INR3,000 crores. And I think our margin trade finance business again will be at approximately INR3,000 crores.
So I think we’ll easily be able to manage with the current debt-equity we have, so which is approximately one-time. So we don’t want gearing to go beyond that and we don’t need gearing to go before beyond that because of the cash surplus that we have. But today, a significant portion of that cash surplus while we are changing the strategy is just sitting in mutual funds. So to give you an example, we have probably 3.5 crores to INR4,000 crores in mutual funds, which is earning a lower yield and it should be a much higher yield once we start deploying that cash into the — into the syndication side.
Unidentified Participant
Sure. Thank you.
Operator
Thank you. Next question comes from the line of Dikant with GreenH Wealth. Please go-ahead.
Digant Haria
Just one follow-up that with this specific fall in small caps, it’s been quite large compared to other large-caps. On our retail broking side, do we see any like system-level risk or at our company-level also, especially on the margin trade funding book and the F&O part. Just general comments, nothing much there. So that’s it.
Chirag Negandhi
No, no. Like our margin funding book is just a 2.5 percentage of the industry book and it is very well-diversified and we are at more than 7,000 plus clients. So average per client book is only INR30 lakh rupees. And our exposure is morely on BSE 500 stocks, which is almost 80%, 80%.
Digant Haria
Okay. Okay. Okay. All right. All right. Thank you. Thank you very much.
Operator
Thank you. Next question comes from the line of Chintan Shah with ICICI Securities. Please go-ahead.
Chintan Shah
Yeah. Thank you for the opportunity again. So, sir, just to understand more on the provisioning part. So probably we have seen in the last — over the last few quarters, we have — we keep — we have kept on doing excess provisioning just to keep, as you told the net and pay-down on the wholesale part. So now it seems to be more-and-more done and dusted on the — with regard to the provisions on the wholesale. But for the — on the ARC front, we have a portfolio of around INR12,842, assuming if there is a slowdown in the recoveries, so do we anticipate any further provisioning further year-on as well, which could hamper the profitability. So just want to understand, are there any negative or negatives or probably drop on pullovers which could drag the profitability in Q1.
Vishal Kampani
We lost you. Could you repeat the question? We couldn’t hear you in the middle.
Chintan Shah
Sure, sir, sure. So sir, on the provisioning front, so probably what we have seen in FY ’24, we had some bouts of excess provisioning, one-off provisioning towards some of the other businesses, largely or ARC or the wholesale portfolio. So now the wholesale portfolio is more or less provided to the extent of 93 percentage. But on the ARC pool, we have a book of INR12,842 crores. And just in case, if there is a delayed recovery cycle there as well, then could we anticipate any further provisioning or leakages from there, which would hamper the overall profitability? Yeah, just wanted to get some sense on that. Yeah.
Vishal Kampani
I think in the past, we’ve guided ARC only has provisions on a six-monthly basis that happen when the assets are reviewed September and March. We don’t have significant assets that require more provision because we have taken a lot of the upfront provision where we felt there will be weakness in the recovery in the March quarter of last year itself. So these will be standard provisions as required by the business when assets reach a certain timeline of resolution. There’s nothing more than that.
Chintan Shah
Sure, sure. Yeah, okay. That’s it from my side. Thank you. Thank you.
Vishal Kampani
Yeah.
Operator
Thank you. Next question comes from the line of Rishikesh with Rohva Capital. Please go-ahead.
Rishikesh Oza
Yeah, hi. Thank you. Sir, my first question is, if you could share going ahead of revenue and profitability do we see for wealth management and syndication business as well.
Vishal Kampani
Sorry, can you repeat the question? It’s not very clear.
Rishikesh Oza
Am I audible to you now?
Vishal Kampani
Yeah. You said you want to have what you want —
Rishikesh Oza
Could you please share how do you see the revenue and profitability going ahead for next two to three years for AMC Wealth Management and private Syndication business?
Vishal Kampani
Sure. So Amita, you want to take the question on AMC profitability next and revenues next couple of quarters, Anuj, followed by that on Wealth.
Amitabh Mohanty
So we are still in the build-up piece in the asset management company, but our burn rates are significantly lower than what we had projected in the — at the start of the year because of the buildup — a higher buildup of equity assets. And the good thing is that we are able to build-up equity assets with reasonable margin.
The way we look at it is this burn phase will continue for the next 2, 2.5 years. And once we cross around INR20,000 crores to INR25,000 crores of equity we should breakeven and build-out from that. For next couple of years, we will be looking to use capital. But at the same time, we will be using our capital to build-up for our investment team or branches, et-cetera, because next couple of years, there’s a lot of work we have to do on scaling the business.
Anuj Kapoor
As far as the wealth business is concerned, clearly, we’re in an investment phase. However, I must point out that it’s already a profitable business. And while we are scaling up quite fast and we will hire quality talent and spread our footprint as far as cities in India and our overseas footprint is concerned, we will be investing in talent. The pace at which we hire is also increasing and hence, we will be investing.
Having said that, we don’t expect the profitability to scale-up in the first couple of years at the same pace at which the revenues will scale-up because there will be investment in talent and other infrastructure costs and technology. But we don’t expect — we expect the business to remain profitable in the coming quarters as well.
Chirag Negandhi
And needless to say, you should expect above industry average growth for us in the years coming.
Rishikesh Oza
And sir, private business, private credit business, what do you see the market revenue and private business? You said that you will be having around INR3,000 crores bookings in the business?
Vishal Kampani
Yeah. So I think it’s fairly simple. You should model as I’ve maintained before that you should model anywhere between a 400 to 500 basis-point spread on the on the capital that we should be able to deploy, including fees. So if we are looking at INR3,000 crores of a steady-state book that we are able to achieve, then that is the kind of spread we will make on it. So in this case, it will be full spread on the book.
So it should be at least 13% to 14%, which will be the earnings and then we try and make fees over and above that. And this will be unlevered. So we will use our balance sheet capital and build this business. We don’t need to take any leverage. The leverage will be taken for the margin freight finance business as well as the affordable housing loans business.
Rishikesh Oza
Got it. Thank you very much.
Vishal Kampani
The important thing here is how effectively we are able to churn the capital. The more you’re able to churn the capital, the more fees we make. Instead of just holding assets for a period of four to five years and earning yields on them, the idea is use active distribution to churn the assets you get on-balance sheet?
Operator
Thank you. Next question comes from the line of Dhrush Sanghvi with Prosperity. Please go-ahead.
Dhruvesh Sanghvi
Yeah, thank you for taking my question. From everyone. I missed the question. So me repeat. On the RBI side on the capital market finance?
Vishal Kampani
RBI side on Capital market finance.
Anuj Kapoor
[Technical Issues] the prohibition with respect to financing loan against shares. So this order had come in the month of October itself.
Dhruvesh Sanghvi
Sorry, there was a disturbance, can you repeat that?
Vishal Kampani
No, I think the loan again share order has been revoked and we’ve started loan again share business from last quarter. We had about INR600 crores of loan again shares last quarter.
Dhruvesh Sanghvi
So we will completely rebuild, right, in terms of that…
Vishal Kampani
There is nothing to rebuild. The entire team was always in-place. It’s just about starting business with the clients, which has already started last quarter.
Dhruvesh Sanghvi
Okay, fine. And in terms of the pending credit book that we have, this — do we see another crores of NPAs adding up in the GNPAs levels or no, I mean, now there is absolute…
Vishal Kampani
We only have one SMA-2 asset where also we have a lot of security cover of roughly INR150 crores. Rest of the book is completely post-COVID book. It’s been performing exceedingly well. In fact, the same question was asked even a year-ago and people were concerned, how will the book run-down? I mean, the book has run-down in front of everybody and has run-down quite substantially and run-down extremely well. So on the remaining book, there is absolutely zero concern. In fact, we think it will run-down even faster. So the earlier estimate was a total period of four years to run-down. I think the whole rundown may happen in the next 12 to 15 months, so a lot faster compared to what we had thought.
Dhruvesh Sanghvi
Yes. And last part, over next two to three years, do we see the IB business now, which is probably doing INR150 crores to INR200 crore profits per quarter, considering the markets don’t tank too much and some side of — some kind of volatility is fine, but do we see that now we achieve a potential number of INR1,000 crores just out of IB in profits per year?
Vishal Kampani
Well, INR1,000 crores of profits is hard to say. I mean, we are very bullish on the IB business. I mean, we’ve never seen a sort of market that we are seeing for capital-raising in most of our — most of our career sitting around this table here. But it is extremely exciting to be winning large deals, which we are and some very, very large left leads, even the private-equity capital that is looking to invest in India is so significant that even if ECM sees a bit of a slowdown because of corrections, there’ll be a massive uptick in the way private-equity will invest in the country. So I think the capital-raising environment is looking phenomenal for the next five years. So very hard to say, we put a number on it, but I can definitely tell you that there will be a ridiculous amount of growth that we will see in capital-raising and we as a leading IB will benefit heavily from it.
Dhruvesh Sanghvi
Yeah. Sure. And…
Chirag Negandhi
I’ll just add to this to what Vishal said. What you’re seeing is a trend where the deals are getting larger and the fees being paid out are higher as well. So for a firm that has a market leadership like we do and for the investments that we’re making in the business, there is no reason to believe that the five years that Vishal spoke about, we continue to grow and become stronger both in absolute and deal terms.
Dhruvesh Sanghvi
Great. Thank you. And last one, there was economic times side note without names where there were certain wars on talent acquisition between our company and to when I believe it was JM versus and I mean, all the expansion, this keeps happening in the industry. But the key raw-material to IB is the talent and what kind of things do we foresee here considering that each investment bank is completely full in terms of their time and they are now picking and choosing on deals? And how do we manage the talent piece here correctly and internally and what has the impact been on — due to this kind of event where your leadership got involved probably. So if you can highlight some thoughts around the overall management pool within the company.
Vishal Kampani
That is a great question and frankly, that is a question we are actually discussing a lot these days. So a few things have happened. I think the investment banking business has exploded for lack of a better word, but the talent in this space has not exploded as much. Luckily for us, we saw that coming at least two to three years earlier and if you guys have been tracking my calls, I’ve been speaking about it for the last three to four years that there will be a decade or shift in the amount of investment banking activity that we will see.
So we’ve prepared ourselves in terms of pushing ahead on recruitment a lot of — in advance in anticipation of the business that we’ll be able to underwrite. You’re completely right in saying that even after the advancements of recruitment, our teams are still completely busy with literally no free time sometimes to even take on new business. But having said that, we have more recruitments in-place and around May, June this year, we have more people joining us on the IB side.
Third, we’ve actually strengthened our bench with the analysts and associate levels quite significantly. We’ve run massive recruitment programs at some of the best universities and MBA schools in the country. So we are — we are increasing our bench dramatically. On the institutional equity side, we have significant hires made with, I would say, some of the best talent in the industry, which is going to lead the business-building a strong derivatives platform, which we did not have. We were a more cash equities focused business.
We’ve made significant resource hiring on the research side. I think on wealth, you’ve already seen the numbers and there are even — there is even more recruitment happening over the next six months. So just the size of our teams and the depth and breadth of coverage of every six months will be — will be growing at a very, very rapid rate.
Dhruvesh Sanghvi
Thank you. Thanks a lot. That’s all from my side. Thank you.
Operator
Thank you. The last question comes from the line of Himanshu with Rock PMC. PMS. Please go-ahead.
Himanshu Upadhyay
See, just one observation was there. AUM for PMS business, there is a sharp fall from INR2,400 crore to INR200 crore in the last quarter. Okay. Any specific reason for it because the market has not fallen.
Vishal Kampani
Not correct. But I think the number. I think the fall maybe by INR200 crores, the fall is not to INR200 crores.
Nishit Shah
That’s mark-to-market.
Vishal Kampani
That is a mark-to-market.
Himanshu Upadhyay
It goes INR2,400 crores to INR2,000 crores.
Vishal Kampani
Yeah, so at INR400 crores, so that last year is nearly 20%.
Himanshu Upadhyay
And in the last quarter, the market had not fallen by that much. So any specific reason for that?
Nishit Shah
No, I think, look, there is some mark-to-market in that and there is — I mean, there are some on the non-discretionary side where there were low-paying fees on certain accounts, we’ve let go of those funds so that we continue to focus on our yield while growing assets under management. And you’ll see going-forward that the improvement and the uptick in the yields comes in as well.
So the profitability of the business gets better going-forward. We were — there is a particular two accounts that were low-yield and we have actually walked away from those. And those were actually about INR275 crores of this was about the low fees account and INR125-odd crores of the — of this impact is on mark-to-market.
Himanshu Upadhyay
Okay. Finally, in last quarter, we said we continue to invest in EWS and are seeing breakeven of newer branches in less than 12 months, okay. So what percentage of this breakeven will be related to equity market transactions, what we are doing there and what could be the overall means RM related revenue generation, which helps the breakeven of newer branches? Some thoughts on that?
Unidentified Speaker
Yeah. We have opened up — you must-have observed that this tire to entire cities are attracting so many new clients now. So all our new branches from April 2022 onwards are happening. We opened more than 29 branches, only Tier-2, entire three cities. So after 29 branches, nine branches we open in current year. So this 20 branches is almost doing a breakeven for us.
Like our main cost is only manpower cost, otherwise is all rented offices. And you see last year, like Q2 was excellent for us. So Q1, Q2 was excellent. Q2 there is a volume degrowth is only 18%. So by and large, all branches and earlier, no local brokers who are having offering any leverage. Now as per the new regulations, everybody is on the same page. So that is advantage for us.
And JM is having so many product baskets. So that would be again an advantage for us. So almost after 29 branches, new branches we opened this current year, almost all are doing a breakeven for us. And in fact, a few — few branches are doing a decent revenue. So in our top-line, these 29 branches are contributing more than 15% of the revenue.
Vishal Kampani
Also given the equity brokerage business where we are building many of these branches, they have built a very strong PPP, which is a third-party product distribution pipeline and this business started getting built almost three years ago and specifically built to counter-cyclicality of the equity markets. We haven’t seen the cyclicality as yet, but you know, know many of our branches, all of the salespeople have been fully trained to distribute mutual funds, to distribute other products. So even if you see some sort of a correction or a slowdown, the TPP volumes pick-up quite dramatically and the sales teams are very engaged with their customers all-the-time.
So what is happening is the broking branches which were really created from a perspective of an equity brokerage product are sort of becoming wealth management branches because they’re catering to the H&Is, the smaller H&I customers in all of those cities. They take many of the other products like mutual funds, insurance, you know IPOs, you know OFS, many of them managed by our investment bank to these customers and they’re kind of redesigning their entire relationship to an overall wealth relationship and not a concentrated equity relationship alone. And this is quite game-changing. And if this continues at this rate, then we definitely see a lot lower cyclicality on the equity broking side.
Himanshu Upadhyay
Yeah. And one last question to Amitab. Amitab, have we seen some banking and large wealth counters now opening for our AMC business to sell our products on equity side? And what is the progress there means on banking channel and out.
Amitabh Mohanty
So some of the midsized banks have started. Some of the larger banks have yet to start, but the engagement is quite intense and we expect in the next couple of quarters them to start. A lot of national distributors and wealth compared doing business. In fact, a lot of wealth counters, which we would say around 15 to 20 wealth counters have started onboarding, some of them have even put up funds on their focus list. So that is one area of growth that we see this year because a lot of these engagements have fructified in the last one or two quarters. And in the next financial year, these are the banks which will — banks and will encounters, which will help us grow our business other than our existing IAFL digital businesses as well.
Himanshu Upadhyay
Okay. Thank you from my side.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Vishal Kampani for closing comments.
Vishal Kampani
Yeah. Thank you. Thank you very much for participating in our 3rd-quarter call. And I reiterate that we are extremely excited about the prospects of all our businesses and the capital markets, the wealth management, the broking, what we are doing on the syndication side as well as our affordable home loans business and look-forward to more interactions and thank you very much.
Operator
Thank you. On behalf of JM Financial Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.