Jio Financial Services sees Jio Credit AUM scale amid expanding financial businesses
JIO Financial Services Ltd.
Buy
₹236
₹216.8
₹315
33.47%
Investment View and Q1 FY27 Overview
Motilal Oswal Financial Services retained its Buy rating on Jio Financial Services following the July 17, 2026 Q1 FY27 results update. The broker described the quarter as healthy, led by strong scaling at Jio Credit and steady progress across payments, insurance and asset management.
The positive view is based on disciplined expansion of the lending business, improving unit economics in payments, traction in the insurance and asset management businesses, and a substantial valuation contribution from investments in Reliance Industries.
Consolidated Financial Performance
| Metric | Q1 FY27 | Year-on-year change | Additional detail |
|---|---|---|---|
| Net interest income | Rs 540 crore | 106% increase | 37% above Motilal Oswal's estimate |
| Other income | Rs 1,043 crore | 306% increase | Included Rs 510 crore of dividend income and about Rs 210 crore of investment income |
| Operating expenses | Rs 573 crore | 270% increase | 44% above the broker's estimate |
| Employee expense | Rs 150 crore | 139% increase | |
| Consolidated pre-provision operating profit, excluding dividend | Rs 505 crore | 38% increase | |
| Credit costs | Rs 24.6 crore | Versus Rs 27.4 crore in Q4 FY26 | |
| Profit before tax, excluding dividend | Rs 460 crore | 18% increase | |
| Consolidated profit after tax, including dividend income | About Rs 830 crore | About 180% increase |
Share of loss from joint ventures and associates was about Rs 19 crore, compared with a gain of about Rs 31.5 crore in Q1 FY26. Reliance Services and Holdings was fully consolidated as a 100% step-down subsidiary from April 30, 2026.
Jio Credit Drives Operating Scale
Jio Credit was the principal operating driver during the quarter. Assets under management increased about 19% quarter on quarter to approximately Rs 30,700 crore at June 2026, compared with about Rs 25,700 crore at March 2026. Disbursements grew approximately 173% year on year and 6% quarter on quarter to Rs 11,300 crore.
| Jio Credit metric | Q1 FY27 | Change or composition |
|---|---|---|
| Assets under management | About Rs 30,700 crore | 19% quarter-on-quarter increase |
| Disbursements | Rs 11,300 crore | 173% year-on-year and 6% quarter-on-quarter increase |
| Net interest income | Rs 260 crore | 119% year-on-year increase |
| Profit after tax | Rs 96 crore | 112% year-on-year and 35% quarter-on-quarter increase |
| Average cost of borrowings | 7.07% | Up 7 basis points quarter on quarter |
| Capital adequacy | 22.35% | At June 2026 |
| Debt-to-equity | 3.9 times | Versus 3 times at March 2026 |
The portfolio comprised home loans at 45%, loans against securities at 10%, and corporate lending and small and medium enterprise loans at 44%. Management said it would scale the loan book responsibly while maintaining stringent underwriting to preserve asset quality as the portfolio matures.
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Progress Across Other Financial Businesses
Asset Management
Jio BlackRock AMC assets under management increased to Rs 18,400 crore from Rs 15,200 crore at March 2026. The platform had more than 600 institutional investors and 1.2 million individual investors. The Prism scheme was launched, while the IFSCA approved a retail fund management entity in GIFT City. The Prism Specialised Investment Fund new fund offer raised more than Rs 150 crore.
Payments
Jio Payments Bank had approximately 3.9 million CASA customers, Rs 617 crore of deposits and about 527,000 business correspondents. Jio Payment Solutions processed Rs 19,200 crore of transactions, up 31% quarter on quarter, with a 12 basis point net processing margin. Gross fee and commission income increased 110% quarter on quarter to Rs 180 crore. The business also launched cross-border collections for Indian exporters.
Management stated that Jio Payments Bank and Jio Payment Solutions had moved beyond the investment phase and were positive at the unit-economics level.
Insurance and Other Businesses
Jio Insurance Broking facilitated premiums of Rs 240 crore, while the reinsurance operation wrote gross written premium of Rs 266 crore in its first operating quarter. Investments continued in BlackRock AMC, wealth management, broking and the Allianz insurance joint ventures. The securities broking platform beta launch was expected in Q2 FY27.
Earnings Outlook and Valuation
Motilal Oswal reduced its consolidated FY27 and FY28 earnings per share estimates by 4% and 6%, respectively, to reflect higher operating expenses associated with incubating and scaling businesses. The broker forecasts consolidated profit after tax to record a 46% compound annual growth rate over FY26-FY28.
For Jio Credit, the broker forecasts an 85% compound annual growth rate in assets under management and a 145% compound annual growth rate in profit after tax over FY26-FY28E. It estimates FY28E return on assets of 1.9% and return on equity of 10.4%.
The Rs 315 target price is based on a March 2028 sum-of-the-parts valuation.
| Business or investment | Valuation basis |
|---|---|
| Jio standalone | 1.0 times FY28E price-to-book value |
| Jio Credit | 2.5 times FY28E price-to-book value |
| Jio Insurance Broking | 25 times FY28E earnings |
| Jio Payment Solutions | 5 times FY28E sales |
| Jio Payments Bank | 1.8 times FY28E price-to-book value |
| Jio BlackRock AMC | 8% of FY28E assets under management |
| Reliance Industries investment | Target value of Jio Financial Services' 6.1% stake, applying a 10% holding-company discount |
The sum-of-the-parts valuation excludes value for insurance manufacturing, wealth management, broking and marketplace businesses because they remain in incubation.
Key Constraints and Risks
- Elevated operating expenses associated with investments in and the scaling of new businesses.
- Execution risk in scaling the new businesses.
- The need for Jio Credit to maintain stringent underwriting and preserve asset quality as its portfolio matures.
- Continued investment requirements in BlackRock AMC, wealth management, broking and Allianz insurance joint ventures.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
