Jio Financial income rises 132% as shares stay flat

Jio Financial Services said consolidated total income rose 132% year on year to INR 1,699 crore in fiscal second-quarter results discussed on an earnings call published by Investing India on Oct. 15.

The shares closed unchanged at 219.01, according to Investing India, leaving the stock about 5% above its 52-week low and 30.9% below its 52-week high. The muted reaction contrasted with rapid growth in reported operating metrics.

Pre-provision operating profit rose 85% year on year to INR 574 crore in the quarter, while profit before tax increased 51% to INR 489 crore. Profit after tax was INR 340 crore. A crore is 10 million rupees.

Chief Executive Hitesh Sethia said the quarter showed “strong operational velocity across all our business lines,” according to the transcript. He said new app features “will redefine the way people experience and engage with their finances.”

Lending supplied the largest growth figures. Jio Credit’s gross assets under management rose 154% from a year earlier and 21.6% sequentially to INR 37,320 crore, while disbursements increased 98% year on year to INR 13,135 crore. Management said the loan book is concentrated in mortgages, corporate and SME loans, and loans against securities.

Payments also expanded, though from a smaller base. Jio Payments Bank reported 40 lakh current-account and savings-account customers, equal to 4 million customers, up 38% from a year earlier. Deposits rose 53% to INR 643 crore, and Jio Payment Solutions lifted its net processing margin to 14 basis points from 9 basis points a year earlier; a basis point is one-hundredth of a percentage point.

In asset management, JioBlackRock Asset Management ended the quarter with INR 22,746 crore in assets under management, up 57% year on year and 24% sequentially. Insurance and reinsurance remain early-stage operations, according to the transcript.

Management pointed to several initiatives still dependent on execution or approvals. Bank of America agreed to buy a 49.9% stake in Jio Credit, with expected growth capital of about INR 18,000 crore, subject to approvals. Jio Payments Bank received regulatory approval for a three-in-one savings account and to act as banker to public issues, while JioBlackRock received approval to launch the BlackRock Advantage World Equity Fund from GIFT City.

The article said a clean earnings-versus-forecast comparison was not available because no directly comparable EPS figure was provided and the revenue forecast was listed in another currency. Jio Financial also did not issue quantitative guidance. InvestingPro Tips cited by Investing India flagged a high earnings multiple and a high price-to-earnings ratio relative to near-term earnings growth.

The call was held in listen-only mode, with no live analyst question-and-answer session. That leaves investors to judge the pace of regulatory approvals, the effect of the Bank of America partnership and whether growth in lending, payments and insurance can convert into durable earnings.