DAM Capital Eyes Fee-Based Shift Amid I-Banking Volatility
Overview
DAM Capital Advisors Ltd, India's sole listed investment bank, is strategically pivoting from volatile deal-making towards stable, fee-based revenue streams. CEO Dharmesh Mehta plans to deploy reserves into asset-light ventures like AIFs, retail broking, and wealth management to reduce balance sheet risk and meet public market expectations for consistent performance, despite a strong first half FY26.
Stocks Mentioned
DAM Capital Charts Course for Stability
DAM Capital Advisors Ltd, India's only publicly traded pure-play investment bank, is charting a course away from the unpredictable nature of deal-making. The firm aims to deploy its capital reserves into recurring, fee-based businesses to smooth out earnings volatility, according to Managing Director and Chief Executive Dharmesh Mehta.
Diversification Drive
While merchant banking remains a core revenue engine, DAM Capital is actively exploring asset-light ancillary services. These ventures require minimal capital outlay and carry limited balance-sheet risk, a crucial diversification strategy for the Mumbai-based entity.
Capital Deployment
The firm reported a substantial ₹287 crore cash balance as of the first half of fiscal year 2025-26. Mehta indicated that a portion of this "dry powder" is earmarked for potential ventures into areas such as alternative investment funds (AIFs), retail broking, and wealth management. The focus is on generating fees without significant cash burn.
Valuation Caution
Mehta acknowledged the current valuation-driven market for wealth management firms but stressed that DAM Capital will not pursue acquisitions based solely on valuation. Any inorganic growth must demonstrate the ability to add value and scale, mirroring their successful acquisition of the IDFC Securities platform.
Financial Performance
In the first six months of FY26, DAM Capital posted consolidated revenue of ₹138 crore, a 28% increase year-on-year. Operating income rose 35% to ₹82 crore, with margins improving to 59.4%. Profit climbed 20% to ₹52 crore, and return on equity stood at a robust 36.5% (including cash).
Investor Outlook
Despite strong quarterly numbers, Mehta urges investors to adopt a three-to-five-year view, citing the cyclical and volatile nature of capital markets. Predictable quarterly performance is an unrealistic expectation, he noted.
Institutional Equities Role
The institutional equities business is increasingly relied upon to build a stable earnings base. Mehta described it as a "steady cash cow" capable of covering operating costs. However, stock broking revenue saw an 18% dip to ₹35.4 crore in H1 FY26.
Investment Banking Dominance
Investment banking revenue surged 61% to ₹95.3 crore, accounting for over two-thirds of the company's top line during the same period. This highlights the continued importance of deal-making, despite the strategic shift.
Market Position
DAM Capital maintains a sector-agnostic approach, unlike many peers. The firm aims to facilitate capital raising for good companies, bringing them to the market and connecting them with suitable investors. Recent mandates include JSW Cement's ₹3,600 crore IPO and Jain Resources' ₹1,250 crore IPO.
Talent Strategy
Addressing industry-wide talent churn, Mehta emphasized building talent internally over acquiring it, offering faster career progression as a differentiator. The bank reported its highest-ever quarterly profit last quarter and maintained an 18% share of the IPO mandate market.
Market Conditions
The broader investment banking sector is experiencing high activity, with dealmaking in India reaching a three-year high in 2025, valued at $154.6 billion. This momentum is expected to continue into 2026, driven by spin-offs, financial services, and the energy transition. Investment bankers anticipate a robust fee pool and strong bonus generation.
