Jio Financial Services shares in focus post Q3 earnings; key results highlights

Shares of Jio Financial Services Ltd (JFS) will be in focus on Tuesday morning after the NBFC reported a profit after tax of Rs 294 crore for the December quarter compared with Rs 668 crore in the September quarter. Jio Financial said its total income for the quarter came in at Rs 414 crore against Rs 608 crore in the September quarter. Unlike September quarter, there was no dividend income this quarter. Dividend income stood at Rs 217 crore last quarter.

Centrum Broking said profit fell 56 per cent sequentially for JFS due to absence of dividend income on shares held in Reliance Industries Ltd and increase in opex on employee addition, capacity building and CSR expenses. "As on 2QFY24, JFSL was trading at NAV/Share (consolidated) of Rs182. If we add total comprehensive income of Rs92.9bn for 3QFY24, we derive NAV of Rs 197 per share," it said.

Interest income for the quarter stood at Rs 270 crore against Rs 186 crore in the September quarter. Pre provisioning operating profit for the quarter came in at Rs 316 crore against Rs 537 crore in the September quarter. In a presentation, JFS said it plans to launch leasing business and supply chain financing, adding that the increased focus is on secured lending, given current market and regulatory developments. It said capability building is well on track and that key leadership positions are being filled. The total employees at the company stood at 516 at the end of December quarter.

JFS said it sees large opportunity in the secured lending space. It said it sees noticeable market reaction vis-à-vis unsecured lending, leading to calibrated approach towards unsecured products. JFS said it has partnerships with 27 insurance companies across general and life insurance and that it has launched embedded, extended warranty and sachet insurance in the case of broking business. In the payments bank, it soft launched debit card and got re-platformed to launch digital savings bank account. In the payments solutions, JFS launched app for merchants, Jio Voice box and implemented Dynamic QR across the ecosystem.

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Jio Financial Services said application has been filed for conversion to CIC for JFS and that the AMC licensing process is underway as planned. Shares of JFS settled at Rs 266.80 on BSE, up 4.55 per cent.

Jio Financial Services, the demerged arm of Reliance Industries Ltd, is a holding company. JFS operates as a financial services business through its consumer-facing subsidiaries namely Jio Payment Solutions (JPSL), Jio Insurance Broking (JIBL) and Jio Finance (JFL). The demerged RIL entity also has a joint venture (JV) namely Jio Payments Bank. As suggested above, the mutual fund application by Jio Financial and BlackRock Financial Management dated October 19, 2023, was under Sebi’s consideration for getting an in-principle approval. Jio Financial and BlackRock are looking to initially invest $150 million each in the JV.

"Jio Financial aims to offer personalised financial products and services to cater to needs of this segment. Additionally, its partners will act as a catalyst for its growth due to the varied business interests which could assist the NBFC in running various pilot programs and customised service offerings to meet the diverse requirements of each sector," KRChoksey Shares and Securities said in a January note.

"Jio Financial Services is looking to bolster financial services penetration with the acceleration of its strategy of being a digital-first financial solution firm. The NBFC would leverage strong brand equity, which could support building of a robust customer base across businesses through cross-selling," KRChoksey said while initiating coverage on the stock with a 'Buy' rating and a target of Rs 290.