Jio Financial share price target after Q1: MOFSL sees 34% upside, retains 'Buy'

MOFSL has retained its 'Buy' rating on Jio Financial Services Ltd (JFS) following the company's healthy June quarter results. The domestic brokerage said Jio Credit is scaling up well, with its assets under management (AUM) crossing Rs 30,000 crore. It added that JFS' other businesses are also making steady progress, supported by improving profitability in the payments segment and continued traction in its insurance and asset management businesses. 

That said, operating expenses remained elevated due to ongoing investments in incubating new businesses and scaling up existing operations, which led MOFSL cut its FY27 and FY28 earnings per share estimates by 4-6 per cent. 

"Jio Financial trades at 1x FY27E P/BV. We model a consolidated PAT CAGR of 46 per cent over FY26-FY28 and reiterate our BUY rating on the stock with a target of Rs 315 (based on March 2028E SoTP). Our SoTP does not factor in valuation from businesses like insurance manufacturing, wealth management, broking and marketplace, which are still in their incubation phase," MOFSL said.

On Friday, JFS shares were trading 5.86 per cent higher at Rs 249.45 on BSE.

For the quarter, Jio Financial reported a profit after tax of Rs 830 crore, up 156 per cent YoY. Total Income (ex-dividend) stood at Rs 1,496 crore, up 141 per cent YoY. Pre-provisioning operating profit (PPOP, ex-dividend) increased 38 per cent YoY to Rs 505 crore.

The domestic brokerage noted that both Jio Payments Bank and Jio Payment Solutions have moved beyond the investment phase and are now contributing positively at unit economics level. Jio Financial, as per the management, continued to invest in incubating BlackRock asset management, wealth management and broking businesses, along with the Allianz insurance JVs.

In the case of Jio Credit, "We expect earnings momentum to strengthen every year, led by a disciplined scale-up of business and a focus on profitability. We expect AUM CAGR of 85 epr cent and PAT CAGR of 145 per cent over FY26-FY28E, with RoA/RoE of 1.9 per cent/10.4 per cent in FY28E," MOFSL said.

The JFS management shared that focus is on scaling the loan book responsibly while maintaining stringent credit underwriting standards to preserve best-in-class asset quality as the portfolio mature.

Jio Financial suggested that the company received the second tranche of Rs 5,934 crore from promoters under the preferential warrant issuance during the quarter, taking the cumulative capital infusion to  Rs 9,890 crore. The remaining Rs 6,000 crore is expected to be infused over the coming quarters, further strengthening the company's capital base to support future growth, the management said.