Jio Financial shares plunge 6% post 56% fall in Q3 profit

Shares of Jio Financial Services Ltd (JFSL) fell 6% in the early trade on Tuesday after the company reported consolidated profit after tax (PAT) of ₹294 crore in the October-December 2024 (Q3 FY24) quarter. The net profit fell 56% on a quarter-on-quarter basis. The company's net profit in Q2 FY24 was ₹668 crore while it stood at ₹332 crore in the first quarter.

The shares of Jio Financial Services opened a gap down today. They fell to an intra-day low of ₹250.1 on the BSE, which is 6.2% lower from the previous session close. Currently, JFS shares are trading 8.8% down compared to the 52-week high of ₹278.20 touched on August 21, 2023, while the shares are up 19.2% from a one-year low of ₹204.65 on the BSE.

In the past six months, JFS shares are up 1.95%, and the stock is up 5.68% on a one-month basis. In the past week, JFS shares have surged 5.70%.

The drop in the net profit of the non-banking financial company (NBFC) was seen due to the absence of dividend income on shares held in parent Reliance Industries Ltd (Q2 FY24 dividend income at ₹371 crore) and an increase in opex on employee addition, capacity building and CSR expenses.

The total consolidated income for the quarter fell 31.9% to ₹414 crore compared to ₹608 crore in the previous quarter and ₹404 crore in the first quarter of the fiscal year.

However, the net interest income for the said quarter surged 44.6% to ₹269 crore as compared to ₹186 crore in Q2 and ₹192 crore in Q1.

“During the quarter, JFSL completed sandbox for consumer durable loans and personal loans, however, post the Reserve Bank of India’s tightening on consumer unsecured lending, the company has increased its focus on secured lending including leasing as a product,” writes Sonal Gandhi, research analyst at brokerage Centrum, in an analysis on the JSF Q3 result.

The company also plans to start a 100% leasing subsidiary -- Jio Information Aggregator Services Ltd -- under which it plans to provide equipment on lease to the end customer. The service will be offered under the device-as-a-service (DaaS) framework, and it will provide finance and operating leases for air fibre, phones and laptops.

JFSL says it is further leveraging its eco-system and will launch supply chain financing in Q4 FY24. Loans against shares or mutual funds, and home loans are in the pipeline while the capability for unsecured and consumer durables products is built up.

During the quarter, Jio Financial added three new partnerships, taking total partnerships to 27. It also launched embedded, extended warranty, and sachet insurance during the quarter.

The company also launched virtual debit cards. In payment solutions, the company pilot launched Jio Voice Box and an app for merchants.

Notably, Jio Financial and Blackrock had last year agreed to form a joint venture to enter India’s AMC business and applied to SEBI in Oct 2023, seeking in-principal regulatory approvals. JFSL and Blackrock are targeting to initially invest $150 million each in the JV.