Analysing Jio Financial Services at a P/E of 109 demands careful scrutiny beyond surface metrics. While the high valuation reflects market optimism in Reliance’s financial services venture, investors should focus on JFSL’s growth trajectory and digital-first approach in India’s evolving fintech landscape. The valuation signals both ambitious expectations and transformation potential in India’s financial services sector.
Share Price Movement
The share price of Jio Financial Services Limited went up 2.35 percent to Rs. 278.80 per share on Thursday, an increase from its previous close of Rs. 272.40 per share. The market capitalisation now stands at approximately Rs. 1.76.299 crore as of January 16, 2025.
Key advantages of Jio Financial Services
- Inclusion in Nifty50: There are expectations that Jio Financial Services may be included in the Nifty50 index by March 2025. This could lead to increased institutional investment and liquidity, potentially driving the stock price higher.
- Joint Ventures: The partnership between BlackRock and Jio Financial Services (JFS) is a 50:50 joint venture called Jio BlackRock, aiming to transform India’s asset management landscape. Launched with $300 million on July 26, 2023, its goal is to democratise investment solutions by merging BlackRock’s global expertise with JFS’s local market knowledge. They plan to offer mutual funds, asset management, wealth management, and brokerage services, with SEBI’s approval.
- Reliance Retail’s network: Jio Financial Services (JFS) has expand by leveraging Reliance Retail’s network, particularly through its subsidiary, Jio Leasing Services. By acquiring Rs. 36,000 crore worth of telecom equipment for leasing to Reliance Jio customers, JFS has taped into Jio’s existing base. The Device-as-a-Service model offers flexibility for customers, while bulk procurement ensures cost advantages. This partnership diversifies JFS’s revenue streams and positions it for growth in the competitive leasing market.
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Brokerages views
KR Choksey Finserv has given Jio Financial Services a ‘hold’ rating with a target price of Rs. 345. The brokerage noted concerns over asset quality for NBFCs in its coverage, while NIMs are expected to be a mixed bag for them.
Geojit Financial Services has kept its ‘hold’ rating on the stock with a target price of Rs 347, citing premium valuations. Brokerage firms will update their views and targets after the company’s Q3 results, expected later this week.
Both brokerages have given an average upside of 25% from current price of Rs. 277.
Financial Highlights
For Q2 FY25, interest income grew by 10.2% to Rs. 205 crore, compared to Rs. 186 crore in Q2 FY24. Dividend income increased by 11.1% to Rs. 241 crore, up from Rs. 217 crore in the same quarter last year. Profits rose by 3.1% to Rs. 689 crore, compared to Rs. 668 crore in Q2 FY24.
Competitors
Jio Financial Services faces strong competition from leading players such as Bajaj Finserv, HDFC, and LIC Housing Finance, which are prominent in financial services, insurance, and lending sectors. Jio Financial Services is currently trading at a P/E of 109, which is higher than the industry P/E of 22.
Market Outlook
The Indian financial industry is experiencing rapid growth, with assets in mutual funds increasing nearly six fold from 2014 to 2024. The insurance sector is also set to reach a US $1 trillion corpus by 2025. India’s thriving fintech sector, digital innovations like the Digital Rupee, and rising rural penetration in credit and insurance are driving further expansion. Government support through policy reforms, such as higher FDI limits, and the growing participation of high-net-worth individuals (HNWI) offer significant growth opportunities.
Overall, Jio Financial Services’ growth story is still unfolding, and it will be fascinating to watch how they continue to expand and evolve in the future.
Written By Fazal Ul Vahab C H
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
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