Jio Financial market cap crosses Rs 2 trillion; surges 20% in one week

Shares of Jio Financial hit a record high of Rs 325 in intra-day deals on Friday backed by near two-fold jump in trading volumes on the BSE.

Jio Financial Services (JFSL) on Friday joined elite group of companies having market capitalisation of over Rs 2 trillion, as the stock hit a record high of Rs 325 and rallied 7 per cent on the BSE in Friday's intra-day trade backed by heavy volumes.

In past one week, the non-banking finance company (NBFC) stock has outperformed the market by surging 20 per cent, as compared to 1 per cent rise in the S&P BSE Sensex. It is now trading at its highest level since its listing on August 21, 2023.

A sharp surge in stock price has seen the market capitalisation (market cap) of JFSL's hit Rs 2.06 trillion mark in intra-day trades. At 09:50 am; JFSL was trading 6 per cent higher at Rs 321.80, with a market cap of Rs 2.04 trillion.

The average trading volumes on the counter nearly doubled. A combined 64.86 million equity shares of the company changed in the first 40 minutes of trade on the NSE and BSE.

JFSL is a systemically important non-deposit-taking NBFC registered with the Reserve Bank of India. It is a holding company and will operate its financial services business through its consumer-facing subsidiaries namely Jio Finance Ltd (JFL), Jio Insurance Broking Ltd (JIBL), and Jio Payment Solutions Ltd (JPSL) and joint venture namely Jio Payments Bank Ltd (JPBL).

According to media reports Paytm is in exploratory talks to sell its wallets business and JFSL is among the forerunners to acquire it. Paytm's wallet business is housed under Paytm Payments Bank. However, JFSL has clarified that the news item is speculative and the company has not been in any negotiations in this regard.

Meanwhile, JFSL aims to increase financial services penetration with the acceleration of its strategy of being a digital-first financial solution company. The NBFC will leverage its strong brand equity, which will support building a robust customer base across all its businesses through cross-selling. The NBFC’s strong capital base is sufficient to cater to the growth strategy of the Company and also act as an adequate cushion for any contingencies going ahead.

Analysts at KRChoksey Shares & Securities expect the lending business to report an asset under management (AUM) of Rs 4,600 crore in FY24E, with a ramp-up in the product pipeline that is in line with consumer requirements. The increased use of mobile apps and push towards UPI-based payments will enable JIOFIN to witness robust traction in volumes given the strong customer base of the parent group, which has above 45 crore telecom subscribers as well as around 25 crore retail customers as of FY23.

With the partnership with Blackrock for the AMC business, the brokerage firm expects the AUM in FY24E post-license approval and product launch to be around Rs 2,330 crore given the industry opportunities, brand equity, attraction towards the capital market, and the right choice of product basket.

Meanwhile, as the loan book grows, JFSL's operating income is expected to contribute significantly to the consolidated operating income of the JFSL group. Further, the capitalisation profile of JFL is expected to eventually benefit from robust liquidity of the JFSL group and the 6.1 per cent stake in RIL as investments held by JFSL through its wholly owned subsidiary Reliance Industrial Investments and Holdings Limited (RIIHL), CRISIL Ratings said in JFSL's rating rationale.