JM Fin - Blue Sky
When a company’s stock breaks out to a multi-year high say, a 7-8 year peak it often signals more than just price movement. It reflects a shift in sentiment, renewed investor confidence, and potentially a turnaround in fundamentals. Technically, these breakouts can trigger powerful momentum, as there’s little overhead resistance and fresh buying interest from both retail and institutional players. This is precisely the kind of setup drawing attention to JM Financial right now. With the stock scaling levels not seen in nearly a decade, it’s worth asking is this the beginning of a long-awaited structural re-rating?
First read my deep dive from 2024 here
Something interesting happened this week, the stock broke it through levels last seen in 2017, yes 2017
The timing of this breakout isn’t random. JM Financial has been actively rebalancing its business moving beyond traditional investment banking and into lending, distressed asset resolution (via ARC), and institutional broking. While these segments faced challenges post-IL&FS and during COVID, the macro environment is turning. Credit growth in India is accelerating, capital markets are buoyant, and the resolution pipeline under IBC is reviving. Add to this the regulatory tightening around non-serious players, and what you have is a cleaner playing field for serious NBFCs with strong compliance culture a club JM Financial firmly belongs to.
From a valuation standpoint, JM had long traded at depressed multiples reflecting concerns around capital deployment and growth visibility. But with ROEs inching up, a cleaner balance sheet, and rising contribution from fee-based businesses, the market appears to be reassessing its stance. In fact, this re-rating might just be beginning. The surge in volumes on the weekly and monthly charts further validates that institutional money could be stepping in, positioning for a longer-term upcycle.
The key now is follow-through will earnings deliver in the coming quarters, and can JM capture a larger share of the capital markets and credit intermediation space? If it does, this 7-year breakout might not just be a chart pattern but the start of a bigger story unfolding.
This is blue sky breakout
A "blue sky breakout" occurs when a stock surpasses its previous all-time or multi-year highs, entering a zone where there is no historical resistance much like an aircraft soaring into clear blue skies with nothing above to limit its path. This pattern is powerful because there’s no overhead supply; no investors are stuck at higher prices looking to exit. As a result, the stock often experiences strong upward momentum driven by fresh buying interest, including institutional money, technical traders, and momentum funds. It also triggers a psychological shift the breakout creates headlines, attracts attention, and fuels FOMO among investors who had previously overlooked the stock. In such scenarios, price discovery begins afresh, and the move can be the start of a much larger trend rather than the end of one.
As business analyst we will continue to monitor their execution.
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