Conference Call between JM Financial Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen in to the full earnings transcript.
Call Participants: Mr. Vishal Kampani - Group Managing Director, Mr. Manish Sheth - Group Chief Financial Officer, Mr. Subodh Shinkar - MD & CEO, Mr. Shashwat Belapurkar - MD & CEO, Anil Bhatia - MD & CEO, Gitanjali Mirchandani - Managing Director & Country Head, Mrs. Sonia Das Gupta - MD, Mr. Ajay Mishra - Executive Director
Introductory Remarks from Vishal Kampani
On behalf of JM Financial, we extend a very warm welcome to all of you to the conference call to discuss our financial results both for the fourth quarter and full 2019-2020. I hope most of you had a chance to go through the presentation, our press release as well as our results. We have updated them on our website and also the stock exchanges. I shall now provide an update on the performance of our businesses.
Our consolidated revenue for FY20 stood at Rs 2,453.55 crores. It is a small decline of 1.3% YoY.
Profit After Tax for the full year FY20 valued at Rs 545 crore, a decrease of approximately 5% YoY
During the uncertainties around Covid-19, we have taken additional provisions across the group to the tune of Rs 175 crores over the last quarter
Our adjusted FY20 PAT without the pre-Covid impact after minority interest was at Rs 621 crores for FY20 and Rs 206.6 crore for the fourth quarter FY20
With that, I will move on to the loan book detail - Our consolidate loan book stood at Rs 11,041 crores, down 18.3% YoY
The breakup of the loan book is as follows: Wholesale mortgages continue to be the largest part of the book and constitutes 70% of our loan book which is approximately Rs 8,000 crores. The wholesale mortgages book registered a YoY degrowth of 20.5% and this has been a conscious strategy for the group
The capital market loan book constitutes 4% of the loan book which is approximately Rs 465 crores. This book has registered a YoY degrowth of 56.8%
The corporate lending loan book which also includes promoter lending constitutes 20% of our loan book which is at Rs 2,272 crore and which is largely flat from last year
The retail mortgages loan book constitutes now 6% of our loan book at roughly Rs 760 crores and the book has registered YoY growth of 28%. This loan book comprises largely of housing finance and our education institutional lending business and also a cost sell of loan against property to our wealth management
Moving on to asset quality, the gross NPA ratio of lending businesses is at 1.65% and net NPA is at 1.13% and the SMA2 stands at 2.64% as of March 31st, 2020
Few comments on liabilities and leverage - On a consolidated basis, our gross debt to equity stands at 1.47 times as of March 31st, 2020 and on a net basis at 1.04 times as of March 31st, 2020
During the full year FY20, we raised approximately Rs 640 crores through public issue of NCDs which has helped us diversify our industry base
As of March 31st, 2020, our borrowing mix comprised of 91% of borrowings from long-term sources and 29% from short term sources. This is compared to 84% from long term sources and 16% from short term sources as of December 31st, 2019
We feel very comfortable with this current position. Infact, we see extraordinarily comfortable having excellent long term borrowing mix currently
For FY20, Investment Banking, Wealth Management and Securities business (IWS) posted revenues of Rs 1611 crore with a profit before tax of Rs 434.6 crores. The business contributed 40% of our growth for FY20. The profit after tax from this segment increased to Rs 311.26 crores for FY20 compared to Rs 239.6 crores for FY19
The AUM/AUA of our wealth management business stood at Rs. 44,883 crore (excluding custody assets) as on March 31, 2020 as compared to Rs. 41,886 Cr as on March 31, 2019 and Rs. 46,886 Cr as on December 31, 2019
The equity component as of March 31st, declined 17.7% YoY. Last part of the decline on March 31st was because of the value of the assets coming down due to the drop in the stock market because of the Covid-19 crisis. The loan book for this segment stood at Rs 3,880 crores which is a decrease of 31.1%. As of FY20, the gross debt to equity for the IWS segment stood at 1.54x and the net debt to equity stood at 0.8x. We are in a extremely cash rich position in the IWS segment and we will look to gain more market share over the next 12 months in these businesses
Moving on to the mortgage lending business - For FY20 this segment had revenues of Rs 1,350 crore with a profit before tax of Rs 543 crores. Profit after tax for this segment stood at Rs 178.6 crores. Our loan book stands at Rs 7,641 crore which is a decrease of 8.1% YoY. The wholesale loan book has decreased as the lower strategic decision we had taken post IFLS and our retail mortgage book has increased because of the strategic decision we had taken 18 months ago
We had some significant recoveries in the distress credit business in the last 12 months and despite an extremely challenging environment, we have managed to have a significant amount of resolution and we hope that we are able to keep up that stream over the next two years despite the crisis we are facing with the current Covid crisis
Moving on to the asset management business which comprises our mutual fund business had revenues of Rs 63 crores with a PBT of Rs 22.5 crores. PAT from this segment de-grew to Rs 10.2 crores for FY20
Group results from Manish Sheth:
Good evening everyone! As usual, before I present the financials, I would like to bring to your notice that any forward looking statements made on this call are based on management’s current expectations. However, the actual results may vary significantly and therefore the accuracy and completeness of this expectation cannot be guaranteed.
In Q4FY20, our revenue grew by 6.12% YoY to Rs 840 crores from Rs 792 crores
The Q4FY20 profit before tax is at Rs 215 crore which is a decline of 12% YoY but Profit after tax increased by 1.49% YoY from Rs 128 crore to Rs 130.56 crore
With regard to the full year numbers, for FY20, the gross revenue is Rs 3,453 crore and our net consolidated profit is Rs 544.98 crore. This represents an EPS of 6.48 versus 6.82 for the same period, last year
As of March 31, 2020, the net worth is at Rs 5,586 crore which is a book value of Rs 66.41 per share
The group finance cost has decreased to Rs 1,385 crore in FY20 as against Rs 1,446 crores during the same period last year, primarily on account of decrease in the borrowings
Our cost of funds for the lending business stood at 10% compared to 9.2% YoY, primarily due to increase in borrowings cost and also due to change in the borrowing mix
Retail business for the short-term and mid-term will suffer. I am bullish in long term for retail but very negative for the short-term. I think you will see bankruptcies going high in the month of September, this year.
