As the financial year 2024 third quarter comes to an end and many of the companies are preparing to announce their earnings for the period. Prominent among them is Jio Financial Services, a subsidiarly of Reliance Industries that would report first quarterly results after the listing in August 2023.
Jio Financial Services is a diversified financial services company which does banking, insurance, payments, mutual funds, and others. For the December quarter, analysts and investors would be keenly watching on how the company has performed and what are its growth prospects for the future.
Jio Financial Services: A force of its own in financial landscape
The digital services leg of Reliance Industries' financial services, into now, has been hived off for an independent take-off as a differentiated brand and an entity under the Jio umbrella. It was introduced in the stock markets in August 2023 and became a separate entity with its self-management as well as the board of directors. The company carries a market capitalization over Rs 2 lakh crore, thereby makes it one of the highest value financial services companies in India.
Jio Financial Services operates through six big subsidiaries and joint ventures, among them Jio Finance, Jio Insurance Broking, Jio Payment Solutions, Jio Payments Bank, Jio Mutual Fund (a proposed joint venture with BlackRock), and Jio Capital (a proposed joint venture with KKR). Therefore, they look forward to leveraging its digital platform, customer base, and network effect so that it can offer a range of financial solution to its customer, retail and corporate.
According to KRChoksey Research, Jio Financial Services reported revenues of Rs 1,022 crore and a net profit of R1000 crore for the six months ending on September 2023. Its payments and insurance businesses had provided a major boost to the company's revenue even as its profit line was buoyed by a stake sale in Jio Payments Bank to State Bank of India. The company also declared an interim dividend of Rs 5 per share for the half year.
The December quarter results will also throw light into the strategies for the subsequent quarters, besides providing segmentation details of the company. Following are some of the key factors which they should be watched out for:
Consumer and business loans, credit cards, and a raft of other lending products growing profitably at Jio Finance. The company is not only up against long-standing players such as HDFC Bank, Bajaj Finance, and ICICI Bank in this segment but also grappling with regulatory challenges and asset quality risks.
Performance and outlook of Jio Insurance Broking, one of largest insurance distributors in the Indian market offering life, health and general insurance products from number of insurers. The company has a strong presence in the online and offline channels and benefits on account of its tie-ups with the Jio Platforms and Reliance Retail. Besides, the company also has plans to enter into the reinsurance business in the future.
Jio Payment Solutions, who operate JioMoney, a digital wallet and payment app with over 100 million users, whose traction and monetization were also explored. The company has expanded into the merchant-base too, besides bill payments and remittance services. Regulatory norms and data security issues apart, the company is facing stiff competition in this segment from players such as Paytm, PhonePe, Google Pay among others.
Progress and potential of Jio Payments Bank between Jio Financial Services along with State Bank of India, as its joint venture partner in 70:30. The company offers savings accounts, deposits, and other banking services to customers primarily focused on underbanked and unbanked segments. The company has more than 50 million customers with over 1 lakh outlets spread across India. In the future, the company also plans to offer micro-credit and micro-insurance products.
Status and scope of Jio Mutual Fund, the proposed joint venture between Jio Financial Services and BlackRock, the world's largest asset management firm. In fact, the company has applied to the Securities and Exchange Board of India (SEBI) for an in-principle approval towards setting up its mutual fund business in India. The company aims at providing a comprehensive set of investment solutions, leveraging the digital platform and distribution reach of Jio Financial Services and BlackRock's global capabilities and brand.
The proposed joint venture between Jio Financial Services and KKR, one of the leading global investment firms. The company has signed the $300 million joint venture offering an alternative investment solution, whether private equity, venture capital, real estate as well as infrastructure funds through a 50:50 joint venture. The company plans to tap the growing demand for alternative assets in India and also explore cross-border opportunities with KKR.
Companies to watch out for — Apart from this, there are umpteen companies that will declare their Q3 results on Monday, January 15, 2024. Some of them are:
Angel One, logo of one the leading online broking and financial services platforms in India. Offering stock trading, mutual funds, insurance, loans and host of other products and services Angel One has over 7 million customer base and over 11,000 sub-brokers across cities and towns in the country. This is expected to propel strong growth in its revenue and profit, amidst the increase in stock market activity as well as active clients, and average revenue per user.
PCBL is the largest carbon black manufacturer in India and ranks seventh globally. PCBL manufactures carbon black as a raw material to the tire and rubber industries, besides being widely applicable in specialty applications such as plastics, coatings, and inks.
The company has four manufacturing plants in India and exporting its products to over 30 countries in the world. The company is expected to report a healthy growth in its revenue and profit, supported by the recovery in the demand from the end user industries and improvement in the product prices and margins.
Choice International is a diversified financial services company with activity offerings in broking, wealth management, investment banking, insurance, and other products and services. The company has more than 2 lakhs customers across and also provides employment to over 1,000 people across India. The continuing steady growth of the company in terms of revenue and profit is indicated to be supported by the company's vibrant broking as well as wealth management divisions, sustained healthy growth of fee income and various cross-selling opportunities.
Kesoram Industries, flagship company of BK Birla Group, is in the businesses of tyres, cement, and rayon. It besides having three manufacturing plants in India is an exporter to over 50 countries. Accordingly, the company expects to report moderate growth in its revenue and profit as these are likely to be impacted on account of higher raw material costs and competitive pressures arising out of tyre and cement segments.
Fedbank Financial Services is a nonbanking financial company that provides gold loans, business loans, personal loans among other lending products. Basically, Fedbank Financial Services is a subsidiary of Federal Bank, and it has over 1,200 branches that are spread across India. The company is expected to report strong growth in the revenue and profit, backed by the growth in gold loan portfolio and improvement in asset quality and margins.
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Conclusion: The Q3 results season is on full steam, and many companies are slated to announce their earnings for December quarter on Monday. According to the expectations, Jio Financial Services is likely to be the most watched out company with it reporting its first quarterly results since its listing. The information provided that the company is believed to play a key role in the financial sector where it has a diversified portfolio of businesses and joint ventures.
Market would be keen to see how the company has performed in Q3, what are its plans and strategies for the future. On Monday other companies who will declare their Q3 results include Angel One, PCBL, Choice International, Kesoram Industries, and Fedbank Financial Services.
The companies would be expected to report a mixed performance as the factors that determine its earnings have impacted their respective segments and industries. The Q3 results would give a sneak peak into health and outlook of corporate sectors in India, and also influence the market sentiment and direction. –(Greatidea360)
