Jio Financial Services’ Q3FY26 performance marks a defining transition from Reliance-Group's new financial services venture to a maturing financial services major with operationally anchored earnings, a shift long awaited by institutional investors tracking the company’s incubation phase. While headline profitability moderated sequentially, the underlying business engine—spanning lending, payments, asset management, and distribution—showed tangible scale and durability. Strong loan growth, accelerating transaction volumes, and rising fee income offset elevated operating costs linked to expansion and full consolidation of Jio Payments Bank. With management signaling confidence in sustainable operating leverage and a clearer earnings mix, Deven Choksey Research has upgraded the stock to ACCUMULATE, setting a revised target of Rs 305, underpinned by book-value based valuation and improving earnings quality.

Operational Inflection: From Treasury Dependence to Business-Led Profits

A structural shift in earnings composition became evident in Q3FY26.
Net income from core business operations rose sharply to Rs 3,860 mn, accounting for 55% of consolidated net income, compared with just 20% a year earlier. This transition materially reduces reliance on volatile market-linked gains and positions the company for more predictable profitability.

Lending, payments, and asset management emerged as the primary earnings drivers.
This diversified contribution reflects a maturing ecosystem strategy where multiple verticals reinforce customer lifetime value rather than operating in silos.

Top-Line Momentum: Strong Growth Masked by Cost Normalization

Total operating income surged 53.4% YoY to Rs 6,885 mn.
The growth was supported by higher interest income, robust fee and commission traction, and fair-value gains, even as finance costs trended upward.

Net Interest Income climbed to Rs 2,918 mn.
This represented 38.9% YoY growth and 13.7% QoQ expansion, driven by rapid loan book scaling at Jio Credit despite a higher cost environment.

Expenses rose sharply as investments accelerated.
Operating expenses jumped 182.9% YoY, pushing the cost-to-income ratio to 48.7%, reflecting network expansion, technology investments, and the full consolidation of Jio Payments Bank.

Profitability Snapshot: Growth with Near-Term Pressure

Pre-Provision Operating Profit rose modestly YoY but declined sequentially.
PPOP stood at Rs 3,535 mn, up 7% YoY but down 39% QoQ, as the prior quarter benefited from one-off income streams.

PAT declined to Rs 2,689 mn.
This represented an 8.8% YoY decline and a sharp 61.3% QoQ fall, primarily due to cost normalization and the absence of associate dividend income seen earlier.

Lending Engine: Jio Credit Scales at Breakneck Speed

AUM expanded 4.5x YoY to Rs 190,490 mn.
Quarterly disbursements reached Rs 86,150 mn, underlining accelerating demand and execution capability.

Funding metrics improved alongside growth.
The average cost of funds declined to 6.99%, capital adequacy remained strong at 24.39%, and leverage stayed conservative at 3.2x, providing ample headroom for expansion.

Payments & Banking: Building Daily Relevance at Scale

Transaction volumes surged across platforms.
Jio Payment Solutions processed Rs 163,150 mn in TPV, representing 2.6x YoY growth, with net processing margins improving to 10 bps.

Payments Bank deposits nearly doubled.
Deposits reached Rs 5,070 mn, supported by an expanding BC network now spanning 287,000 touchpoints nationwide.

Asset Management & Insurance: Early Scale, Strategic Spend

Jio BlackRock AMC crossed Rs 149,720 mn in AUM.
With over 1 million retail investors across 10 funds, the AMC is scaling rapidly, though near-term profitability remains muted due to upfront investments.

Insurance broking gained traction.
Premium facilitation rose 22.5% YoY to Rs 2,120 mn, strengthening the “Protect” pillar of the ecosystem.

Digital Distribution & AI-Led Architecture

Digital reach crossed 20 million users.
Monthly active users stood at 9.2 million, creating a powerful funnel for cross-selling financial products.

AI and data investments aim to compress long-term cost ratios.
Management emphasized agentic intelligence, unified data layers, and automated underwriting as key levers for margin expansion over the medium term.

Financial Snapshot: Key Metrics

Valuation Framework: Book-Led with Holdco Discount

Deven Choksey values Jio Financial at 1.8x current book value.
After applying a 20% holding company discount, the derived fair value stands at Rs 305 per share.

The risk-reward has improved post correction.
The recent stock price consolidation, combined with a rising share of operating income, provides a more attractive entry point for medium-term investors.

Investment View: ACCUMULATE with Medium-Term Conviction

Jio Financial Services is transitioning from promise to performance.
While near-term profitability may remain volatile due to reinvestment intensity, the strategic groundwork—distribution, technology, capital, and ecosystem integration—positions the company for scalable, high-quality earnings.

Key monitorables ahead:
• Sustainability of payment margins at scale
• Asset quality trends as the loan book seasons
• Monetization trajectory of wealth and insurance platforms
• Operating leverage as investment intensity stabilizes

Recommendation: ACCUMULATE
Target Price: Rs 305
Suitable for investors with a medium-to-long-term horizon seeking exposure to India’s next-generation financial ecosystem.