Jio Financial Services shares rally 6% after stellar Q1 results. Buy, sell or hold the stock?

Shares of Jio Financial Services rallied 6% to Rs 250 on the BSE on Friday after the company reported a 155% year-on-year (YoY) jump in consolidated net profit to Rs 830 crore for the first quarter, compared with Rs 325 crore in the corresponding period last year.

Revenue from operations surged 227% YoY to Rs 2,004 crore from Rs 612 crore a year earlier. Interest income rose 165% YoY to Rs 962 crore, while fee and commission income jumped to Rs 325 crore from Rs 54 crore.

Pre-provision operating profit grew 38% YoY to Rs 505 crore, while profit before tax rose 131% to Rs 970 crore from Rs 419 crore. The company also received dividend income of Rs 509 crore during the quarter.


Buy, sell or hold Jio Financial shares?
Motilal Oswal maintained its Buy rating on Jio Financial Services with a target price of Rs 315, implying a 34% upside. The brokerage said the company delivered a healthy quarter, driven by strong growth in Jio Credit, whose assets under management (AUM) crossed Rs 300 billion.

It also highlighted steady progress across the payments, insurance, and asset management businesses, although operating expenses remained elevated due to continued investments in incubating new businesses and expanding existing operations. Motilal Oswal cut its FY27 and FY28 EPS estimates by 4% and 6%, respectively, to account for higher operating costs, but expects consolidated PAT to grow at a 46% CAGR between FY26 and FY28.

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Jio Financial Services Q1 highlights
Jio Financial said business momentum remained strong across segments during the quarter. Gross assets under management (AUM) of its NBFC business expanded 2.6 times YoY to Rs 30,667 crore from Rs 11,665 crore. Deposits with Jio Payments Bank rose 1.7 times to Rs 617 crore, while total payment value in the payments business increased 2.5 times to Rs 19,208 crore.

Jio Credit, the company's NBFC arm, continued to post robust growth. Gross AUM surged 163% YoY to Rs 30,667 crore, while disbursements jumped 173% to Rs 11,252 crore.

The loan book remained well diversified across mortgages, loans against securities, and corporate and SME lending. Mortgages accounted for 45.4% of AUM, corporate and SME loans made up 44.2%, while retail loans against securities contributed 10.4%.

Net interest income at Jio Credit rose 118% YoY to Rs 257 crore. Pre-provision operating profit increased 128% to Rs 154 crore, while profit after tax climbed 113% to Rs 96 crore.

Payments and digital platform scale up
Jio Payments Bank reported total income of Rs 83 crore for the quarter, compared with Rs 11 crore in the year-ago period. Customer deposits increased 72% YoY to Rs 617 crore, while the number of CASA customers grew 51% to 3.9 million. Its business correspondent network expanded to more than 5.27 lakh touchpoints.

Jio Payment Solutions also posted strong growth, with total payment value rising 2.5 times YoY to Rs 19,208 crore. Gross fee and commission income increased to Rs 176 crore from Rs 27 crore, while net fee and commission income rose to Rs 24 crore from Rs 7 crore.

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