Why Jio Financial Services Share Price is Rising

The challenges plaguing the NBFC (non-banking finance company) sector extend well into 2024. Experts are talking of consolidation, capital raising, and profitability pressures in 2024.

However, amid these challenges, the stock of one NBFC continues to rise.

The shares of this company are up 15% in the last five days and 30% in the last month. The surge in share price has also propelled the company's market cap beyond Rs 2 trillion.

If you're wondering which company is this, it is none other than Jio Financial Services.

So, what's pushing the stock higher? Let's find out.

#1 Strong Business Outlook

Shares of the company have been in an upward trend for a variety of reasons.

The stock was up in January in anticipation of strong results for the December 2023 quarter. However, it experienced a temporary blip after the company reported its results.

The company reported a 56% sequential decline in net profit while revenue slumped 32% sequentially.

While the company's numbers disappointed investors, the strong business outlook continued to lift the share price higher post the announcement of the result.

The company has successfully completed the sandbox for consumer durable loans and personal loans. It's launching an operating lease model and working towards a supply chain financing solution.

It has also Increased the number of insurance company tie-ups to 27 and is now offering a full range of insurance products.

With respect to digital banking and technology, the company has revamped its digital savings account and launched virtual debit cards, merchant app, and Jio Voice Box for merchants. It's focused on technology stack and has filled key leadership positions.

On the regulatory front, the company has filed an application with RBI for conversion from NBFC to a core investment company.

It has also filed an application with the market regulator for in-principal approval for a Joint Venture with Blackrock in the asset management space.

#2 Reports on Acquisition of Paytm's Wallet Business

Shares of Jio Financial Services Ltd (JFSL) rallied earlier this month after a report said crisis-ridden One 97 Communications, the parent entity that owns and operates the Paytm brand, is in talks with Jio Financial and HDFC Bank to sell its wallet business.

While Paytm is reportedly in talks with Jio Financial since last November, talks with HDFC Bank began just ahead of the Reserve Bank of India's ban on Paytm Payments Bank. The report added that as part of a larger bailout plan, Jio may offer to acquire Paytm Payments Bank.

In an exchange filing on 4 February 2024, Paytm categorically denied any investigation by the Enforcement Directorate on the company, its associates, and / or its founder and CEO Vijay Shekhar Sharma for anti-money laundering activities.

The company further said that the recent direction from the Reserve Bank of India is part of the ongoing supervisory engagement and compliance process.

In response, Jio Financial has denied reports of being in any talks to acquire Paytm's wallet business.

How Jio Financial Services Share Price has Performed Recently

In the past month, shares of the company have gained over 30%. The stock has gained 55% in the past six months as well.

The stock touched its 52-week high of Rs 348 on 26 February 2024 and a 52-week low of Rs 204 on 23 October 2023.

At the current price, the company trades at a price to earnings multiple of 54x and price to book value multiple of 4.1x.

About Jio Financial Services

Jio Financial Services (JFSL) is a NBFC registered with RBI (Reserve Bank of India). The company was originally incorporated as Reliance Strategic Investments in July 1999 under the Companies Act 1956.

JFSL is a holding company and will operate its financial services business through its consumer-facing subsidiaries namely Jio Finance Limited (JFL), Jio Insurance Broking Limited (JIBL), and Jio Payment Solutions Limited (JPSL) and joint venture namely Jio Payments Bank Limited (JPBL).

The company started its journey as Reliance Strategic Investments, a wholly owned subsidiary of Reliance Industries.

It plans to enter retail lending, digital payments, insurance, broking, and asset management segments.

By offering diversified financial services, the company plans to compete directly with established players like Bajaj Finance and emerging startups like Zerodha and Paytm.

For more details, see the Jio Financial Services company fact sheet and quarterly results.

For a sector overview, read our finance sector report.

You can compare Jio Financial Services with its peers:

Jio Financial Services vs ICICI Securities

Jio Financial Services vs Angel One

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...