Jio Financial Services rises 3% ahead of Q3 earnings, up 10% in a month

Shares of Jio Financial Services jumped nearly 3 percent on January 15 morning ahead of the company’s December quarter earnings scheduled to be announced later in the day. This will be the non-banking financial company’s (NBFC) second quarterly results announcement after its listed on the bourses in August 2023.

KRChoksey Shares and Securities, which initiated coverage on the stock with “buy” call and a target price of Rs 290, expects the lending business to report Rs 4,600 crore assets under management (AUM), with a ramp-up in the product pipeline.

The increased use of mobile apps and push towards UPI-based payments will enable Jio Financial, which was carved out of Reliance Industries,  to witness robust traction in volumes, given the strong customer base of the parent group, it said.

At 9.35 am, Jio Financial Services was trading 2.1 percent higher at Rs 260.40 on the National Stock Exchange (NSE). The stock is up 10 percent so far in January. KRChoksey’s target price of Rs 290 suggests a 13 percent upside over the January 12 closing price of Rs 255.05.

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Jio Financial Services is a holding company and will operate its financial services business through its consumer-facing subsidiaries namely Jio Finance Ltd, Jio Insurance Broking Ltd, and Jio Payment Solutions Ltd (JPSL) and joint venture namely Jio Payments Bank Ltd (JPBL), the brokerage said.

In the previous quarter, Jio Financial Services reported a net profit of Rs 668 crore, a jump of 101 percent sequentially. Total revenue from operations increased 47 percent to Rs 608.04 crore QoQ.

According to Securities and Exchange Board of India’s latest processing status report on mutual fund applications, the one by Jio Financial and BlackRock Financial Management, dated October 19, 2023, was under consideration for an in-principle approval. Jio Financial and BlackRock are targeting to initially invest $150 million each in the joint venture.

“Jio Financial aims to offer personalised financial products and services to cater to the 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 said in a January note.

Also Read | Jio Financial Services Q3 results today: Here’s all you need to know

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.

The company is well-positioned to gain higher traction across all its business segments, given a strong parentage and a wide customer base of parent company, it added.

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