In a strategic move to shield itself from the inherent ups and downs of deal-making, DAM Capital Advisors Ltd, India's sole listed pure-play investment bank, is charting a new course. The firm intends to deploy its substantial capital reserves into building recurring, fee-based revenue streams, as revealed by its Managing Director and CEO, Dharmesh Mehta.
Building a Stable Revenue Foundation
While merchant banking continues to be the primary engine for earnings, the Mumbai-based bank is actively exploring asset-light ancillary services. The focus is on ventures that demand minimal capital investment and carry limited balance-sheet risk. This diversification aims to create a more predictable income base.
As of the first half of the fiscal year 2025-26, DAM Capital reported a robust cash balance of ₹287 crore. Mehta clarified that a part of this is earmarked as working capital for the institutional equities business. However, a significant portion is "dry powder" reserved for potential forays into new areas like alternative investment funds (AIFs), retail broking, and wealth management.
"We will look at everything that generates fees without large cash burn or high balance-sheet risk," Mehta stated. He acknowledged the valuation-driven nature of the wealth management sector, noting that it requires heavy upfront investment for new players. DAM Capital's approach will be measured: "We will build these businesses when we get the right team or the right platform at reasonable valuations."
Navigating Market Volatility as a Listed Entity
Being a publicly-traded investment bank presents a unique challenge: aligning the lumpy, transaction-driven nature of the business with the stock market's expectation of steady quarterly performance. For the six months ending September, the company posted a consolidated revenue of ₹138 crore, a 28% increase year-on-year. Operating income jumped 35% to ₹82 crore, with the profit rising 20% to ₹52 crore.
Despite these strong numbers, Mehta advises investors to maintain a long-term perspective of three to five years. "Capital markets are cyclical and volatile, and it is not realistic to deliver predictable quarterly numbers," he emphasized. The firm's return on equity (RoE) for H1 FY26 was an impressive 36.5%, which Mehta said would be "upwards of 300%" if adjusted for cash.
To bolster stability, the company is increasingly relying on its institutional equities division, which Mehta describes as a "steady cash cow" capable of covering operational costs. In the first half of FY26, investment banking revenue surged 61% to ₹95.3 crore, constituting over two-thirds of total revenue.
Positioning for India's 'Golden Decade' in Capital Markets
DAM Capital's expansion blueprint is rooted in the belief that India is entering a "golden decade" for its capital markets. This optimism stems from the country's strong growth narrative, which will necessitate massive capital expenditure and fundraising, coupled with a structural shift in corporate thinking towards public listings.
The bank's current pipeline is robust, featuring 21 IPOs and multiple QIPs at various stages. Mehta pointed out that some deals from 2025-26 might spill over into the next fiscal due to typical execution timelines of nine to twelve months for an IPO.
"The scale of capital markets today is unlike anything we’ve seen before. The fee pool and IPO sizes simply did not exist earlier," Mehta remarked. This sentiment is echoed by industry data, which showed India-focused dealmaking hitting a three-year high in 2025, with disclosed value soaring 87% to $154.6 billion.
DAM Capital maintains a sector-agnostic and mandate-agnostic positioning, unlike several peers who specialize. "Our intent is to bring good companies to the capital market," Mehta said, highlighting recent roles in major transactions like JSW Cement's ₹3,600-crore IPO and Reliance Industries' massive ₹53,000-crore rights issue.
While the bank's stock has faced pressure since its market debut in December 2024, falling 50% from its listing price to around ₹207.35 per share, the firm's strategic pivot towards building a diversified, fee-heavy business model aims to convince investors of its long-term value proposition in India's booming financial landscape.
