Jio Financial Services Ltd

NSE:JIOFIN

Earnings Call Analysis

Jio Financial Services Reports Strong Growth and Product Expansion

In Q2 FY '25, Jio Financial Services Limited (JFSL) achieved a consolidated income of INR 694 crores, up from INR 418 crores in Q1, reflecting robust operational execution. The company's profit after tax surged to INR 689 crores compared to INR 313 crores in the previous quarter. Key initiatives included major product launches across various financial services, enhancing the Jio Finance app, which now serves over 6.5 million users. JFSL aims to maintain this momentum with continuous product innovation and a focus on optimizing customer engagement while pursuing a substantial growth strategy backed by a strong net worth of INR 1,37,144 crores.

Strong Financial Performance in Q2 FY '25

In the second quarter ending September 30, 2024, Jio Financial Services Limited (JFSL) showcased impressive financial performance, with a consolidated total income of INR 694 crores, marking a substantial increase from INR 418 crores in the previous quarter and INR 608 crores year-over-year. This growth was primarily driven by a variety of income sources, including INR 205 crores from interest, INR 241 crores in dividends from Reliance Industries Limited, and INR 207 crores from net gains on mutual funds. The company reported a profit after tax of INR 689 crores, a significant jump from INR 313 crores in Q1 FY '25 and INR 668 crores in the same quarter last year.

Operational Expansion with New Products

JFSL emphasized its commitment to operational growth by rolling out several new financial products during the quarter. Notable offerings include home loans, corporate lending, and insurance products through various subsidiaries. The company aims to cater to diverse customer needs by enhancing its portfolio, and early customer feedback has been positive, driving anticipation for future launches.

Digital Strategy and Customer Engagement

The launch of the revamped JioFinance app has been a key component of JFSL's strategy to digitize and improve customer interaction across its financial services. After its beta rollout, approximately 6.5 million users have already accessed JFSL's new age financial services, which includes features that allow for easy transactions and account management. The integration with the MyJio app further broadens the customer base, providing seamless access to financial services.

Incremental Investments and Increased Capitalization

As part of its growth strategy, JFSL reported a robust consolidated net worth of INR 1,37,144 crores and total assets of INR 1,44,000 crores. The firm has also pursued strategic investments, increasing its stake in Jio Payments Bank (JPBL) from 78.95% to 82.17%, signaling confidence in future growth prospects within the banking sector.

Future Outlook and Continued Growth Momentum

The management conducted a positive outlook, expressing confidence in sustaining growth through new product launches and enhancing digital offerings. With plans to roll out more innovative financial solutions across various service lines, JFSL is positioned to expand its market presence significantly. The ongoing investments in technology and user experience are expected to improve customer retention and acquisition further.

Earnings Call Transcript 2025-Q2

[Jill Deviprasad, executive]

Good evening, everyone. My name is Jill Deviprasad, and I'm the Head of Investor Relations for Jio Financial Services Limited. On the declaration of the results for the second quarter ended September 30, 2024, for FY 2024-25. It gives me immense pleasure to welcome the analysts, investors and our colleagues to this virtual meeting. We have with us today our MD and CEO, Mr. Hitesh Sethia; and our Group Chief Financial Officer, Mr. Abhishek Pathak. [Operator Instructions] The earnings presentation is uploaded on our website, www.jfs.in and on the stock exchanges.

Before I hand over the call, I would like to read out the safe harbor statement. This presentation contains forward-looking statements, which may be identified by the use of words like plans, expects, estimates or other words of similar meaning. All statements that address expectations or predictions about the future, including, but not limited to, statements about strategy for growth, product development, market position are forward statements based on rational and data. Actual results may vary materially given market circumstances.

I will now hand over the call to Hitesh to discuss the business in detail.

[Hitesh Kumar Sethia, executive]

Thank you, Jill. Good evening, everyone. I would like to extend a warm welcome to all those joining this earnings call today. At the outset, let me wish you all a very happy festive season from all of us here at JFSL. We are delighted to discuss with you some significant business updates and the progress made by JFSL on operational execution during the second quarter of financial year 2025. .

The Indian economy remains resilient and has exhibited robust growth. To support the growth aspirations of young and growing country, the demand for all forms of financial services remains encouraging. At JFSL, we have embarked on a mission to provide the people of India access to seamless and digital first financial services. For this, we are leveraging our deep understanding of the Indian consumer state-of-the-art technology, data analytics and a wide direct-to-customer distribution.

Here, you can see a snapshot of JFSL's key consolidated financials for the second quarter and first half of FY 2025. For Q2 FY '25, the company reported a total consolidated income of INR 694 crores and a profit after tax of INR 689 crores. For the 6 months ended September 30, 2024, your company has reported a total consolidated income of INR 1,112 crores and a profit after tax of INR 1,002 crores.

With a well-capitalized net worth of INR 1,37,144 crores as on September 30, 2024, we have a robust balance sheet to pursue our growth aspirations. This slide is a snapshot of the strong execution momentum underway, which showcases multiple product launched in the market during Q2 FY '25, from loan on mutual funds to home loans and corporate lending and from life insurance and general insurance under our insurance booking entity to salary accounts in the payment bank, we have substantially ramped up our product portfolio to cater to the diverse financial needs of our customers.

I'm happy to report that the initial feedback to these products has been very encouraging, and there are more launches in the pipeline for the ensuing quarters. Being a digital-first financial service player, our Jio Finance app is a very important enabler of our mission. It serves as our digital store front for our customers across different business lines of JFSL.

True to our mission of democratizing access to financial services, JioFinance is positioned as a gen all app, which is easy and intuitive enough to be used by customers across all generations. We launched a beta of the app on May 30, 2024, and ran a campaign thereafter to gather customer feedback, which was used to further enhance the user experience of the app. The result of this entire exercise is the new and improved JioFinance app rolled out on October 1. I'm very happy to report that around 6.5 million users experienced JFSL's new age financial services on our digital platform, and these numbers are only growing as we speak.

The growth in our user base is also being supported by the integration of JioFinance app with MyJio, which was completed during Q2 FY '25. This means that all the users of MyJio app now have access to JFSL's range of financial services, thereby expanding the customer funnel for the company. In Q1 2025, even when the app was in beta mode, we had launched -- we had products available on it, such as loan on mutual funds, savings account, UPI, bill payments and auto and 2-wheeler insurance.

In Q2, we have added many more products such as home loans, including balance transfer, loan against property, UPI International, account aggregator for multiple bank accounts and mutual fund holdings, biometric-enabled payments and addition of credit card billers for leading banks. Moving forward, we mentioned earlier that JFSL's aim is to be a trusted financial companion for customers across every touch point in their financial journey and cater to their core financial needs across 4 categories. Borrow, transact, invest and protect.

Before we get into the details of each of our subsidiaries, here is a snapshot of how we are well placed to cater to the evolving needs of our customers across the 4 categories through subsidiaries focused on specific financial service verticals. Our ability to serve these core financial needs of customers is strongly supported by our foundational principles of 4 Rs, which is reputation above all, regulatory adherence in letter and spirit, return of capital and return on capital. These principles guide every decision that we take and provide a very strong foundation for sustainable growth.

Now coming to specific subsidiaries and their businesses, starting with JioFinance Limited, or JFL, our NBFC, a diverse area of products are now available for retail and corporate customers through JFL, which has built a loan book of INR 1,206 crores as on September 30, 2024. On the retail side, in addition to loan on mutual funds, we also now offer home loans, including balance transfers, loan against properties and loan loan securities.

All these products are available at very competitive terms, and I'm sure our customers will find our value proposition attractive. We are also present in the market with a suit of tailored, corporate finance solutions, including vendor financing, working capital loans, term loans and invoice factoring. These are helping enterprises grow their business through easy access to timely credit. On the leasing business, Jio Leasing Services Limited continued its ship-leasing operations through the JV with Reliance Strategic Business Ventures Limited based out of the GIFT City.

Moving on to Jio Payments Bank or JPBL. JPBL continued to offer convenient savings bank account related services to Indian and increase the base of CASA customers to 1.5 million. With a revamped [ tech stack ], customers can now fully open a digital savings bank account in under 5 minutes and avail services, including secure, biometric-based authentication and virtual as well as physical RuPay platinum debit cards. JPBL savings account is helping customers streamline and declutter their financial statements by allowing them to make routine, recurring transactions through this account, thereby reducing the volume of transactions that show up on their regular savings bank account statements.

At the same time, the JioFinance app also gives customers the convenience of viewing their holdings across different bank accounts and mutual funds through a single, aggregate view, helping them manage their finances easier and better. JPBL is also making steady progress in terms of expanding its business correspondence or BC network across the country with a base of 3,000 such BCs by the end of Q2 FY '25, and this network is being scaled up further as we speak.

Turning to Jio Payment Solutions or JPSL. JPSL has seen a number of new features being added to make payments easier for merchants and retail customers alike. These include enabling recurring payments on payment gateways, onboarding small merchants in under 10 minutes and bank account verification solutions. Credit card billers from leading banks were also added to the JioFinance app during the quarter along with mobile recharge facility for Airtel and Vodafone customers in addition to Jio subscribers.

In the pipeline for JPSl, upcoming features such as NEFT and RTGS payment solutions for B2B invoice payments and brand EMIs are on the road map. Moving on to Jio Insurance Broking Limited for JIBL. In Q2 FY '25, JIBL commenced distributing health insurance and life insurance directly to customers through the digital channel and expanded partnership with insurers for auto and 2-wheeler insurance. JIBL is now offering as many as 24 insurance plans digitally across life, health, 2-wheeler and motor insurance directly to customers through the JioFinance App and the website, jioinsure.in. Overall, a comprehensive range of insurance products are now easily available to customers through tie-ups with 31 leading insurance providers across life, health and general insurance and across 3 distribution channels that is direct to customer, embedded and ecosystem sales and lastly, institutional sales. JIBL also continued to be on a strong growth trajectory in terms of enabling extended warranty on consumer durables and devices with over 1 million devices covered till date.

With respect to institutional channel, the growth momentum has been very encouraging with onboarding of some large and mid-corporates and employee benefit portal was also launched during the quarter for these institutional clients. Overall, this business is making good progress in terms of tapping into increasing demand for insurance in the country by ensuring a steady, supply of tailored, bespoke insurance products. Regarding our JV with BlackRock for Investment Solutions, we are very happy to share that on October 3, 2024, the regulator has granted JFSL and BlackRock, in principle, approval to sponsor a mutual fund subject to certain customary requirements being fulfilled.

This is a very important milestone for us towards getting the final approval for setting up a world-class asset management company in the country, which will offer innovative and digital-first solutions to Indians. We are making good progress in this JV with respect to hiring the right talent, deploying the technology infrastructure and firming up the product road map and go-to-market strategy so that we can offer innovative and digital-first investment solutions to our customers.

During the quarter, we also incorporated Jio BlackRock Investment Advisors Limited, another 50-50 JV with BlackRock. This entity will eventually offer wealth management services to customers. To conclude, as you can see, we have made considerable progress during the quarter gone by when it comes to launching new products in the market.

Going forward, we are confident of sustaining this momentum with new products being rolled out over the successive quarters. Along with that, we will also further strengthen the digital distribution of products and services through JioFinance app and MyJio reaching out to our new customers. We are also leveraging data analytics to sharpen the targeting of customers based on their ability and intent to consume different types of financial services and optimize the proposition for them as we continue this journey. This, we believe, shareholders, will help us serve our customers seamlessly and effectively.

Thank you very much. Now I would like to invite Mr. Abhishek Pathak, our Group CFO, to provide a comprehensive overview of our financial performance.

Abhishek, over to you?

[Abhishek Pathak, executive]

Thank you, Hitesh. Good evening, everyone, and seasons greetings from all of us at JFSL. As Hitesh mentioned, the quarter ended September 30, 2024, has been a significant one in terms of strong operational execution, characterized by the launch of new products as well as expansion of our direct-to-customer digital distribution through our JioFinance app. Moving on, I'm pleased to present the financial highlights for the second quarter ended September 30, 2024. Our financial results for this period are prepared in compliance with Indian accounting standards, as prescribed by the Ministry of Corporate Affairs.

As you're aware, JFSL is a holding company and consolidates the results of its various operating entities with itself. This includes the consumer-facing entities, namely JioFinance Limited or JFL, Jio Insurance Broking Limited, or JIBL, Jio Payment Solutions Limited, or JPSL; Jio Payments Bank or JPBL; our JV with[ SBI ], Jio Leasing Services Limited or JLSL; and JIO Finance Platform and Services limited. Further, the consolidated financial statements also include the results of 3 more entities, namely Reliance Industrial Investments & Holdings Limited or RIIHL, which is an investment holding company and a wholly owned subsidiary of JFSL. Reliance Services & Holdings Limited or RSHL, which has been accounted for as an associate and Reliance International Leasing IFSC Limited, or RILIL, an entity based out of Gift City SEZ in Gujarat which has been accounted for a joint venture with Reliance Strategic Business Ventures Limited in accordance with Ind AS 110.

All these entities are managed by independent boards with a robust governance structure. As part of the governance framework, JFSL has also established comprehensive group-level compliance, audit and risk functions for effective oversight and monitoring. During the quarter under review, 2 new entities were incorporated, JioFinance Platform and Services Limited, a wholly owned subsidiary for distribution of financial products and allied services; and Jio BlackRock Investment Advisors Private Limited, a 50-50 JV with BlackRock, which will provide investment advisory services subject to regulatory approvals.

Further, the company received approval from Department of Economic Affairs Ministry of Finance to increase the aggregate limit for foreign investments in the company, including Foreign portfolio investment up to 49% of its paid up equity share capital on a fully diluted basis. Coming to the financial performance now.

JFSL's consolidated total income for the quarter was INR 694 crores as compared to INR 418 crores in the preceding quarter and INR 608 crores in the same period last year. This comprise the following: Interest income of INR 205 crores on interest-bearing assets and investments, predominantly income from our treasury book, dividend income of INR 241 crores received on shares of Reliance Industries Limited, held by [ RIIHL ]. Fees and commission income of INR 41 crores on account of fees received by our insurance broking and payment services businesses, net gain on fair value changes on money market and liquid mutual funds of INR 207 crores.

The overall improvement in systemic liquidity and corresponding fall in yields led to higher gains on our treasury book. The company's total expenses during the quarter, including provision of INR 4 crores was INR 146 crores as compared to INR 71 crores in the year ago period and INR 79 crores in the first quarter of FY '25. This was largely on account of increase in employee cost and other operating expenses pursuant to scaling up of our operations.

The total expenses also include CSR expense of INR 14 crores in Q2 FY '25. Share of Associates & Joint ventures increased to INR 225 crores in Q2 FY '25 from INR 218 crores in the corresponding period of FY '24 and INR 62 crores in the first quarter of FY '25. This was primarily on account of the dividend received by [ RSHL ] on its investment in RIL shares. Accordingly, the consolidated profit after tax for the quarter stood at INR 689 crores as compared to INR 313 crores for Q1 FY '25 and INR 668 crores in the same period last year.

Now moving on to the balance sheet items. JFSL's consolidated net worth stood at INR 1.37 lakh crores as on September 30, 2024. Consolidated total assets stood at INR 1.44 lakh crores with a consolidated total investments of INR 1.37 lakh crores. During the quarter under review, the company invested INR 68 crores in the payments bank, JPBL to increase its holding from 78.95% to 82.17%. Also, our leasing services subsidiary, JLSL, invested INR 67.50 crores in RILIL.

Now moving on to the stand-alone financial performance. Stand-alone total income for the quarter ended September 30, 2024, was INR 383 crores compared to INR 134 crores in the preceding quarter and INR 149 crores in the same period last year. As indicated earlier, the total income is represented by interest income or interest-bearing investments, net gain on fair value changes on money market and liquid mutual fund investments fee and commission income and dividend income. The total income for the quarter also includes a dividend income of INR 235 crores received from RIIHL. Total expenses, including provision for the quarter on a stand-alone basis was INR 55 crores as compared to INR 36 crores in Q1 FY '25 and INR 25 crores in Q2 FY '24.

As mentioned earlier, this was on account of increase in employee costs and other expenses in line with our operational scale up. On a stand-alone basis, the profit after tax of the company during the quarter was INR 305 crores as compared to INR 72 crores for the preceding quarter and INR 89 crores in the corresponding quarter last year. The company's stand-alone total assets as of September 30, 2024, stood at INR 24,889 crores with total investments of INR 23,952 crores. Stand-alone net worth stood at INR 24,813 crores as of September 30, 2024. Even as we continue our growth journey by accelerating product rollouts and overall operational execution, our endeavor continues to be optimization of the cost-to-income ratios across entities by leveraging a modular and scalable technology stack and harnessing JFSL's group synergies. I would like to conclude by thanking all of you for your continued support as we strive to create value in each of our businesses and value for each of our stakeholders.

With this, I would like to hand over the call to Jill. Thank you so much for your time.

[Jill Deviprasad, executive]

Thank you, Hitesh and Abhishek, and thank you, everyone, for joining this call. As we conclude our earnings call, we invite you to explore the detailed earnings presentation available on our website and the stock exchanges. Have a good one.