**DAM Capital Explores Asset-Light Services to Diversify Revenue**
DAM Capital, primarily driven by merchant banking, is now assessing asset-light ancillary services that require minimal capital investment and pose limited balance-sheet risks to broaden its revenue streams. The Mumbai-based investment bank reported a cash reserve of ₹287 crore for the first half of the 2025-26 fiscal year. According to Mehta, a portion of this cash is allocated for working capital in the institutional equities sector, while the remainder serves as potential funding for ventures into alternative investment funds (AIFs), retail broking, and wealth management.
Mehta emphasized the firm’s strategy, stating, “We will consider all opportunities that generate fees without significant cash burn or high balance-sheet risk.” He noted that wealth management is currently valuation-driven rather than profit-focused, requiring substantial upfront investment for new entrants. DAM Capital plans to develop these businesses when the right team or platform is available at reasonable valuations.
Despite the surge in valuations for wealth management firms, DAM Capital will not pursue acquisitions based solely on these valuations. Mehta explained, “Any inorganic growth will depend on our ability to add value and scale to acquired platforms, similar to our approach with the IDFC Securities platform.” Mehta, a veteran from Enam Securities who transitioned to Axis Capital after its acquisition of Enam, acquired IDFC Securities in 2019 for ₹86 crore, rebranding it as DAM Capital, where he currently holds around 40% ownership.
As a publicly listed investment bank, DAM Capital faces the challenge of aligning the unpredictable nature of deal-making with market expectations for consistent quarterly performance. For the September quarter, the firm reported consolidated revenue of ₹138 crore for the first half of the fiscal year, marking a 28% increase from the previous year. Operating income rose by 35% year-on-year to ₹82 crore, with a margin of 59.4%, up from 56.2% the prior year. The company’s profit also increased by 20% to ₹52 crore. Despite these positive results, Mehta advises investors to adopt a long-term perspective, stating, “We have always encouraged investors to consider a three-to-five-year investment horizon. Capital markets are cyclical and volatile, making it unrealistic to expect predictable quarterly results.”
The return on equity (RoE) for the first half of 2025-26 was reported at 36.5%, including cash, with an adjusted RoE exceeding 300%, according to Mehta. To establish a more stable earnings foundation, DAM Capital is strategically positioning itself for future growth.
**FAQ**
**What is DAM Capital’s strategy for revenue diversification?**
DAM Capital is exploring asset-light ancillary services that require minimal capital investment and limited balance-sheet risk to diversify its revenue streams beyond its primary focus on merchant banking.
