Jio Financial Services Q3 Review — DRChoksey Maintains 'Hold' On The Stock; Lowers Target Price, Here's Why

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Deven Choksey Research Report

Jio Financial Services Ltd. delivered a healthy performance in Q3 FY25, driven by a sharp increase in Assets Under Management to Rs 41,990 million, which contributed to a stable interest income from loans and treasury operations.

This was further supported by fee-based income from its insurance and payment services verticals. The company's strategic focus on a digital-first approach and partnerships, such as the BlackRock JV for mutual funds, positions it to capitalize on India's growing financial services landscape effectively.

Key growth drivers during the quarter included retail lending (home loans and loans against property), small business financing, and innovative insurance offerings such as sachet insurance and institutional coverage. Additionally, Jio Financial Services continued to expand its payment and insurance platforms, leveraging AI-driven efficiencies and collaborations to improve financial access in rural and underserved markets. Despite a YoY rise in operational expenses due to investments in scaling operations, revenue growth mitigated the impact, highlighting effective cost management strategies.

Despite Jio Financial Services ramping up its operations and expanding its product portfolio, including mutual funds, insurance, and digital solutions, the company remains in a growth and scaling phase. With ongoing investments, regulatory approvals, and operational ramp-up efforts, it is challenging to accurately value or make precise earnings estimates at this stage.

While the company’s long-term prospects are promising, the volatility in earnings and the uncertain near-term outlook warrant a more cautious approach. Based on this we reduce our P/BV multiple of 1.7x (earlier 2.0x previously) and continue to give a 20.0% Holdco discount to arrive at a revised target price of Rs 286 per share (earlier Rs 345).

Currently, we value the NBFC based on its December 31, 2024, book value of Rs 216.3 per share. Consequently, we maintain a “Hold” rating on the stock, awaiting better visibility into its financial performance as operations mature.

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