Jio Financial Services Q1 results steady; strategic initiatives continue, say analysts

June was a steady quarter for Jio Financial Services Ltd (JFS), as strategic initiatives continued, with expansion in NBFC, leasing and investments. The demerged entity of Reliance Industries Ltd (RIL) reported  a 5.81 per cent drop in its year-on-year (YoY) consolidated profit at Rs 312.63 crore for the June quarter against Rs 331.92 crore in the corresponding quarter last year. 

Motilal Oswal Financial Services Ltd (MOFSL) said treasury income for the quarter declined as high-yielding FDs matured during the quarter. The amount received on maturity was invested in liquid instruments. JFS' expenses for the quarter declined sequentially due to the exclusion of business setup costs in Q1, MOFSL said. 

"Going forward, the management focus is on expanding secured lending products, by launching new products like LAP and LAS. Further, a 50-50 JV with BlackRock to launch wealth management and broking businesses is in advanced development stages. Furthermore, JFSL has received final RBI approval to convert from an NBFC to a Core Investment Company. We have a long – term positive outlook on the company," said Arihant Capital Markets. 

JFS is currently working to enhance its market position and operational capabilities. Focusing on the digital-first approach, the company has launched several initiatives, e.g., acquiring multi-bank UPI and integrated payments solutions and streamlining transaction processes, thereby improving customer convenience, MOFSL said. 

"A cornerstone of company’s growth strategy is its diversified product portfolio and innovative financial solutions. Recently, the company introduced embedded finance products like EMI options on credit/debit cards and Brand EMI. This move not only enhances affordability for consumers but also strengthens competitiveness in the marketplace," MOFSL said.

In the NBFC segment, JFS launched vendor financing, loans against mutual funds and introduced device financing solutions. It is beta-testing home loans and aims to expand its presence in secured lending products like LAP and Loan against securities. It further aims to enhance customer engagement through D2C strategies with a digital-first approach.

In the case of leasing, JFS initiated operating lease business of AirFiber devices in June. Its embedded finance product provides customers with cost-effective leasing options, reducing asset ownership risks. With shareholder approval for related party transactions up to Rs 36,000 crore, the company is focused on scaling up operations. Future plans include launching leasing services for solar panels and IT equipment, MOFSL said.

In the case of investments, JFSL and BlackRock have formed a 50:50 JV to enter the wealth management and broking business. Key leadership roles have been identified, with infrastructure and tech platforms in advanced stages of development, the brokerage said.

Among key business updates, MOFSL said green shoots were observed in each of the business. Operating lease business commenced operations, it said while noting that JFS is working on setting the governance and policy framework.