Jio Financial shares slide over 2% as Q1 profit declines 6%

Shares of Jio Financial Services Ltd (JFSL), a part of Reliance Industries (RIL), fell over 2% in opening trade on Tuesday, in an otherwise positive broader market, a day after the company released its June quarter earnings report. The sentiment was dented as the country’s third largest listed NBFC, after Bajaj Finance and its holding company Bajaj Finserv, reported 6% year-on-year decline in its net profit for the quarter ended June 30, 2024.

Snapping three sessions gaining streak, Jio Financial shares opened lower at 350.55, down 1.3% against the previous closing price of ₹355.25 on the BSE. Extending opening losses, the NBFC heavyweight declined as much as 2.4% to ₹346.80, while the market capitalisation dropped to ₹2.20 lakh crore. Meanwhile, RIL shares were also down by 0.62% to ₹3,173.90 on the BSE.

JFSL shares hit an all-time high of ₹394.70 on April 23, 2024, while it touched its record low of ₹204.65 on October 23, 2023.

In a post-market hour on Monday, Jio Financial released its June quarter earnings, posting a net profit of ₹312.63 crore as against ₹331.92 crore in Q1 FY24. Sequentially, the profit increased by 0.6% from ₹310.6 crore in the March quarter of FY24.

The total revenue rose marginally by 0.97% to ₹418 crore in Q1 FY25 as against ₹414 crore in the same period last year. The revenue was ₹418.18 crore in the quarter ended March 31, 2024, as per the exchange filing.

During the quarter under review, interest income dropped to ₹162 crore, compared to ₹202 crore in the June quarter FY24 and ₹281 crore in Q4 FY24.

The total expenses rose to ₹79.35 crore from ₹53.81 crore a year ago but dropped from ₹103.12 crore in the March quarter.

Last week, JFSL got the Reserve Bank of India (RBI) approval for the conversion of the company from a non-banking financial company (NBFC) to a core investment company (CIC). On November 21, 2023, JFSL, the country’s third largest listed NBFC after Bajaj Finance and its holding company Bajaj Finserv, had submitted an application to the central bank for the conversion for granting CIC status.

JFSL is a holding company for operating a set of financial services businesses through its subsidiaries Jio Payment Solutions Ltd, Jio Payments Bank and Jio Insurance Broking Ltd, Jio Finance, and Jio Leasing. As a CIC, the company looks to get into the business of retail lending, merchant lending, leasing, payments bank operations, payments solutions and insurance broking. The company has also entered into a joint venture with BlackRock to foray into the asset management business and has sought in-principle approval from SEBI for the same.

According to the RBI norms, it is mandatory for JFSL to undertake the conversion exercise while changing the shareholding pattern and control of the company following the demerger from parent, RIL, in July 2023.

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