JM Financial shares plunge 10% after SEBI bars it from acting as debt issue lead manager

Shares of JM Financial Ltd slumped as low as 9.8% to hit an intraday low of ₹79.30 apiece on the BSE, after the Securities and Exchanges Board of India (SEBI) on March 6 barred the company from acting as a lead manager for any public issue of debt securities.

The scrip opened a gap-down at ₹82.04, lower by 6.7% as against the previous closing price of ₹87.94. This was in line with the broader BSE Sensex, which was trading 431.14 points or 0.58% lower at 73,668.25. At 12:19 pm, JM Financial's share price was trading 9.48% lower at ₹79.59. JM Financial’s market capitalisation stood at ₹7,605.41 crore with more than 7.53 lakh shares exchanging hands on the BSE, as against the two-week average of 9.85 lakh shares. The company hit a 52-week high of ₹114.95 on January 29 this year, whereas a 52-week low of 57.38 on March 29 last year.

In the past one year, the share price of the company has given 25.89% in returns.

According to the capital markets regulator, JM Financial can, however, continue to act as a lead manager for the public issue of debt securities for the existing mandates for 60 days from the date of the order. The restrictions have been imposed after the capital market regulator observed that regulatory norms were violated in the public issues of non-convertible debentures (NCDs) during the year 2023.

The capital markets regulator in its interim order said that it undertook a routine examination of the public issues of non-convertible debentures (NCDs) during the year 2023 for which JM Financial was one of the lead managers. The regulator observed that in a particular issue, a significant number of individual investors sold the securities allotted to them on the day of listing itself. “The holding pattern of the securities showed that a very large percentage of securities issued changed hands on the day of listing as a result of which retail ownership came down sharply. This was unusual,” it noted.

In response to this, the company said that it shall fully cooperate in the investigation.

SEBI’s order came days after the Reserve Bank of India, earlier this month, ordered mortgage lender JM Financial Products Ltd (JMFPL) to "cease and desist" from doing any form of financing against shares and debentures, including sanction and disbursal of loans against initial public offering (IPO) of shares as well as against subscription to debentures.

The banking regulator has said that "apart from violating regulatory guidelines", there are serious concerns about governance issues in JM Financial Products, which are detrimental to the interest of the customers.