Holding Company To Lender: Decoding Jio Financial’s Next Phase As Core Business Overtakes Treasury Income

When Reliance Industries decided to spin off its financial services arm, the market anticipated a major listing. Since the demerger, Jio Financial Services has remained in focus.

Jio Financial Services has a market capitalisation of about Rs 1,90,000 crore, placing it among India’s largest financial services companies. The stock listed in August 2023 at Rs 265 and now trades near Rs 296.

A recent buy report from Choice Broking set a target price of Rs 350. This implies an upside of about 18% from current levels.

Earlier criticism centred on Jio Financial Services functioning largely as a holding company for Reliance shares, with most income coming from interest and dividends. The second quarter of fiscal 2026 marked a change.

During the quarter, income from core operations exceeded treasury income for the first time. Core business income increased five-fold year on year to Rs 317 crore. This income accounted for 52% of total earnings, compared with 14% a year earlier.

The company now generates revenue from lending, payments and insurance activities.

Total income in the second quarter rose 44% year on year to Rs 1,002 crore. Profit after tax remained largely unchanged at Rs 695 crore.

Jio Credit, the lending arm, ended the second quarter with assets under management of Rs 14,712 crore — the total value of loans outstanding. This was 12 times higher than a year earlier. The company disbursed Rs 6,624 crore of loans during the quarter.

The company borrows at an average cost of about 7.06%, supported by its balance sheet and brand strength. The spread between borrowing and lending rates supports margins, an advantage smaller non-banking financial companies — lenders regulated by the Reserve Bank of India — often lack.

Jio Financial Services uses the MyJio app to onboard customers. The broader Jio ecosystem includes telecom and retail users, which the company uses to distribute financial products. The company has about 18 million unique users across its digital platforms.

About 40% of mutual fund inflows come from B30 cities — locations outside the top 30 Indian cities by assets under management. The digital model enables access across urban and rural regions.

The company has formed partnerships to expand operations.

Jio Financial Services holds a 50:50 joint venture with BlackRock to operate an asset management business. The venture has gathered nearly Rs 16,000 crore of assets within four months and uses artificial intelligence — computer-based systems that analyse large data sets — in fund management.

The company has also partnered with Allianz to enter life and general insurance. The tie-up combines Allianz’s insurance expertise with Jio’s domestic distribution.

Jio Financial Services has a consolidated net worth of about Rs 1.35 lakh crore. The company has also raised additional capital from promoters through warrants.

The capital base provides capacity to absorb economic stress and fund expansion, including in insurance.

The main concern remains return on equity. The company earned Rs 695 crore on a net worth of Rs 1.35 lakh crore, translating into an annualised return of about 2%. Leading Indian banks typically report returns of 15% to 20%.

The company remains in an investment phase, with spending on technology, staffing and physical presence. These investments are yet to reflect in returns.

Execution risk is another factor. The company operates across lending, payments, insurance and asset management. Managing multiple businesses simultaneously poses operational challenges. Competition from established players such as Bajaj Finance and HDFC Bank remains intense.

Choice Broking cites a “flag and pole” pattern — a technical chart formation — suggesting a possible breakout. On fundamentals, analysts view the stock as a long-term investment.

Analysts tracking the stock expect revenue to grow 33.2% in fiscal 2026 and 14.2% in fiscal 2027. Net income is forecast to expand at similar rates over the next two years.

The stock trades at about 87 times forward earnings. Consensus estimates imply a potential price rise of about 15.5%.