Breaking News:How it plans to beat I-banking volatility– What Just Happened

While merchant banking remains the firm’s primary earnings driver, DAM Capital is evaluating asset-light ancillary services that require minimal capital deployment and limited balance-sheet risk to diversify its revenue base.

The Mumbai-based investment bank reported a cash balance of ₹287 crore as of the first half of the 2025-26 fiscal year. “A portion of this is required as working capital for the institutional equities business, but a part of it is also dry powder for potential ventures into businesses like alternative investment funds (AIFs), retail broking, and wealth management,” Mehta said.

“We will look at everything that generates fees without large cash burn or high balance-sheet risk,” he added. “Wealth management today is a valuation-driven segment, not profits. For a new entrant, it requires significant upfront investment. We will build these businesses when we get the right team or the right platform at reasonable valuations.”

While the market has witnessed a sharp expansion in valuation for wealth management firms, DAM Capital will not pursue acquisitions solely on the basis of valuation considerations. “Any inorganic growth will depend on our ability to add value and scale to acquired platforms similar to what we did with the IDFC Securities platform,” Mehta said.

An Enam Securities veteran who later moved to Axis Capital post Axis Bank’s acquisition of Enam, Mehta acquired IDFC Securities in 2019 for ₹86 crore along with a consortium of investors, rebranding it as DAM Capital. He currently owns around 40% of the firm.

Managing earnings volatility

As a listed investment bank, DAM Capital faces the challenge of reconciling the lumpy nature of deal-making with public-market expectations for consistent quarterly performance.

As of the September quarter, DAM Capital’s revenue for the first six months came up to ₹138 crore on a consolidated level. This was up 28% from the year-ago period’s top line. Operating income, too, saw a 35% year-on-year jump to ₹82 crore while its margin against the top line came up to 59.4% vs the previous year’s 56.2%. The company also saw its profit rise 20% to ₹52 crore.

Despite the strong set of numbers, Mehta asks investors to hold a long-term view for his company. “We have always told investors to take a three-to-five-year investment view,” Mehta said. “Capital markets are cyclical and volatile, and it is not realistic to deliver predictable quarterly numbers.”

The company’s return on equity (RoE) for the first half of 2025-26 stood at 36.5%, including cash. “Adjusted for cash, RoE would be upwards of 300%,” Mehta added.

To build a more stable earnings base, currently the firm is increasingly leaning on its institutional equities business. While this segment remains sensitive to cash-market volumes, Mehta described it as a “steady cash cow” that can eventually cover the firm’s operating costs and much more.

Its stock broking revenue fell 18% on-year in the first half of 2025-26 to ₹35.4 crore, while contributing 26% to the top line. Meanwhile, investment banking revenue rose 61% to ₹95.3 crore and made up over two-thirds of the company’s revenue in the same period.

DAM Capital’s stock, which saw a 39% listing pop in its December 2024 market debut, has seen subdued investor interest since then. The stock price has plummeted 50% from its listing and is currently trading at ₹207.35 per share.

Despite evident market pressure, DAM Capital is not trying to position itself as a marquee-deals-only firm, a strategy adopted by many of its larger and unlisted peers.

Sector-agnostic positioning

Unlike several peers that specialize in specific sectors, DAM Capital chooses to position itself as a universal investment bank. “We don’t choose mandates as large or small, or by sector,” Mehta said. “Our intent is to bring good companies to the capital market wherein the investors make good returns, and corporates get funding from the right set of investors for their long-term growth plans.”

During 2025-26, DAM Capital has acted as a banker to JSW Cement’s ₹3,600-crore public listing and Jain Resources’ ₹1,250-crore initial public offering, alongside several smaller sub- ₹1,000-crore transactions. Despite being a relatively young platform, the firm has also been the banker to large marquee deals over the last few years, such as Afcons Infrastructure’s ₹8,400 crore offer, IRFC’s ₹4,600 crore IPO, and a ₹2,800 crore IPO for JSW Infrastructure.

Beyond IPOs, DAM was also a banker to Reliance Industries’ ₹53,000-crore rights issue and qualified institutional placements (QIPs) worth ₹3,000 crore in companies such as CG Power and SpiceJet.

Industry churn and entry barriers

India’s capital markets currently comprise around 15 large domestic platforms and a similar number of foreign banks, all competing for marquee transactions. With issuers typically appointing only three to four bankers per deal, entry barriers remain structurally high.

Against this backdrop, senior-level attrition across the investment bank has made headlines over the past year. The Street is watchful of any such churn, especially in a listed company, because a flight of established dealmakers can end up affecting how many transactions come into the firm. This, in turn, can potentially affect the bank’s deal fees.

“Talent churn is common in bull markets and affects all investment banks,” Mehta said. “Our strategy is to build talent rather than buy it. Faster career progression is our key differentiator versus larger institutions.”

But despite this churn, DAM Capital reported its highest-ever quarterly profit last quarter. It maintained an 18% share of the overall IPO mandate market.

“Our mandate wins are driven by our ownership, commitment, honesty and our impeccable execution track record not aggressive valuation pitching ” Mehta said.

The golden decade thesis

DAM Capital’s expansion strategy is underpinned by Mehta’s conviction that India is entering a “golden decade” for capital markets, driven by the country’s strong growth story, which will require large capital expenditures, hence large fundraising requirements, and a structural shift in corporate mindset towards public listings.

DAM Capital’s 2026 pipeline includes 21 IPOs and multiple QIPs at various stages. Some 2025-26 deals, Mehta noted, may spill over due to execution timelines.

“A typical IPO cycle lasts nine to twelve months, so overlap between years is inevitable,” he said. “The scale of capital markets today is unlike anything we’ve seen before. The fee pool and IPO sizes simply did not exist earlier.”

To be sure, dealmaking involving India reached a three-year high in 2025, with disclosed value at $154.6 billion—up 87% from full-year 2024, Mint reported on 2 January, quoting Elaine Tan, senior manager, deals intelligence at LSEG.

“Current activity reflects several themes, including more pure‑play spin‑offs and continued strong interest in financial services and the energy transition—setting a solid foundation for momentum into 2026,” Tan told Mint.

Investment banking firms are also counting on this momentum to lead to an increase in their fee pool.

“The fee pool in the past few years has been gradually increasing on the back of increased volumes. We expect the deal volume across M&A, ECM & DCM to remain robust in 2026 and consequently drive a higher pool for the overall investment banking industry,” Ramesh Srinivasan, managing director and chief executive officer of Kotak Investment, had told Mint earlier this month.

Srinivasan had also said bonus pools are closely linked to fee income and are expected to broadly mirror the strong fee generation seen in 2025.