Jio Financial Services shares: JFS arm gets CARE's stable rating on bank facilities

Shares of Jio Financial Services Ltd (JFS) are in focus on Monday morning after CARE assigned ratings to the proposed bank facilities and instruments of wholly-owned arm Jio Finance Limited (JFL), factoring in its linkages and strong capitalisation of JFSL group.

CARE assigned CARE AAA with stable rating to Jio Finance's Rs 4,000 crore long term bank facilities and Care A1+ rating to its short term bank facilities. It assigned CARE AAA with stable rating to Jio Finance's Rs 3,000 crore non-convertible debentures (NCDs) and Care A1+ rating to its commercial papers.

The rating agency believes that JFL will continue to demonstrate a stable business profile with the expectation of need-based timely support from JFSL given the strategic importance, the shared brand name and the management control.

JFS, through its subsidiaries, associates, and joint ventures, plans to engage in lending, leasing, insurance broking, payment banking, payment solutions, asset management, and stock broking businesses, CARE said.

"Mukesh D. Ambani is the promoter of JFS. The promoter group has raised the stake in JFSL post listing from 45.8 per cent to 47.12 per cent, showing long-term commitment of promoter towards JFS group. Promoter group is not expected to materially dilute its stake in JFSL in the near term," CARE said.

The ratings take into consideration the strong capital buffers available with the company to scale up the operations, robust liquidity framework and the experience of management team.

"However, these rating strengths are partially offset by the nascent stage of company’s operations as it has started its operations in FY24 and is yet to launch and stabilise its product offerings. Being an NBFC, JFL would be a capital-intensive subsidiary of the group and hence JFSL’s continued support to JFL will be a key monitorable," it said.