JM Financial Limited has received rating reaffirmation from ICRA Limited under Regulation 30 of SEBI LODR, with the rating agency maintaining its assessment while making adjustments to the commercial paper programme size.

Rating Action Summary

ICRA Limited has taken the following rating actions for JM Financial Limited's instruments:

The rating communication was published by ICRA on its website on December 31, 2025, with JM Financial making the disclosure on January 1, 2026.

Rating Rationale and Business Model Pivot

ICRA's ratings are supported by JM Financial Group's established track record and franchise in the domestic capital and financial services market, comfortable capitalisation, and adequate liquidity. The Group has over five decades of experience in investment banking and securities businesses and has progressively diversified its offerings across capital markets, distribution, asset management and allied services.

In FY2025, the management announced a strategic pivot in its business model to enhance focus on:

• Corporate advisory and capital markets
• Wealth and asset management
• Private markets with syndication and co-investment
• Affordable home loans businesses

Given the focus on syndication and co-investment, the business model is expected to be asset light in the private markets business.

Financial Performance and Capitalisation

The Group's financial metrics demonstrate the impact of its strategic transformation:

The indebtedness has eased amid the pivot in the business model with gearing declining to 1.10 times as on September 30, 2025 (net gearing of 0.80 times). The loan book reduced significantly to ₹4,616 crore as on September 30, 2025 from ₹10,814 crore as on March 31, 2024.

Revenue Diversification and Performance

As on September 30, 2025, the Group's revenue stream remained diversified across multiple segments:

JM Financial reported consolidated net profit of ₹721 crore in H1 FY2026 on total income of ₹2,166 crore, compared to consolidated net profit of ₹774 crore in FY2025 on total income of ₹4,453 crore.

Asset Quality and Risk Factors

While the Group reported improved financial metrics, ICRA noted certain challenges. The GNPA ratio stood at 10.90% as on September 30, 2025 compared to 8.70% as on September 30, 2024, though this appears optically elevated due to the contraction in the loan book. The net NPA ratio remained relatively stable at 2.60% as on September 30, 2025.

ICRA highlighted that the Group's exposure to capital market volatility and the inherent risk profile of key businesses remain partial offsets to its strengths. The rating agency noted that portfolio concentration towards large-ticket exposures can result in protracted resolution processes.

Liquidity Position

As on September 30, 2025, the Group maintained adequate liquidity with unencumbered on-balance sheet liquidity comprising cash and bank balance, Government securities, Treasury bills and liquid mutual funds aggregating ₹2,955 crore, equivalent to approximately 26% of borrowings. Historically, the Group has maintained high on-balance sheet liquidity equivalent to 25-30% of outstanding borrowings.

India's consumption credit market displayed early signs of recovery in the first half of FY26, though credit card issuance remained a significant outlier with sharp declines, according to a comprehensive analysis by JM Financial Institutional Securities.

Credit Card Segment Faces Sharp Decline

The credit card segment witnessed a notable slowdown in new issuances, contrasting sharply with recovery trends in other consumption credit categories. The data revealed concerning metrics for the credit card industry during the September quarter of FY26.

Asset quality trends in credit cards showed mixed signals, with early delinquencies improving through a 40 basis point sequential decline in PAR 1–30. However, stress in the PAR 31–90 bucket increased for private banks compared with FY25 levels, indicating persistent risks in portions of the unsecured borrower base.

Personal Loans and Consumer Durables Show Strong Recovery

In stark contrast to credit cards, personal loans demonstrated robust recovery momentum. The segment reversed its FY25 decline with impressive growth figures across multiple timeframes.

Public sector banks led the personal loan recovery, supported by a sharp increase in average ticket sizes, while asset quality improved across lenders and borrower categories. Consumer durable loans also rebounded significantly, with private banks regaining market share in this segment, though asset quality trends remained mixed with rising longer-tenure delinquencies despite improvement in early buckets.

Secured Lending Segments Show Steady Growth

The secured lending landscape demonstrated consistent improvement, with public sector banks gaining substantial market share across key segments. Home loan disbursements grew 11% in the first half of FY26, with PSBs accounting for half of origination value.

Growth patterns skewed towards higher-ticket loans, reflecting rising residential property prices, while smaller ticket segments showed early signs of stress. Auto loans and two-wheeler loans recorded modest improvement in disbursement growth, though asset quality weakened in auto loans, particularly for NBFCs and lower ticket sizes.

Lenders Adopt Cautious Approach to New Borrowers

The report identified a broad-based decline in new-to-credit (NTC) borrower share across segments, especially in personal loans, two-wheelers and consumer durables. This trend indicates lenders are prioritising seasoned borrowers amid concerns around unsecured credit quality.

Early delinquencies have either improved or remained stable across most segments, except auto loans driven by NBFCs, with cautious underwriting remaining evident across the industry. The overall disbursement growth across consumption segments ranged between 6% and 35% year-on-year in the September quarter of FY26, compared with contraction or low single-digit growth during FY25.

Market Outlook and Investment Preferences

JM Financial noted that this recovery trend could support loan growth in FY27 if current patterns sustain. The brokerage maintains a selective approach on financial stocks, expressing preference for specific institutions across different categories:

Preferred Banking Stocks:

• ICICI Bank
• Axis Bank
• SBI
• City Union Bank
• DCB Bank

Preferred NBFC and HFC Stocks:

• Aditya Birla Capital
• Shriram Housing Finance
• PNB Housing Finance
• Aadhar Housing Finance