Jio Financial Services has reached a pivotal transformation milestone, evolving from a holding company structure to an active financial services provider. The company achieved a significant shift in Q2 FY26, with core business operations generating more income than treasury activities for the first time since its demerger from Reliance Industries.

Core Business Takes Center Stage

The second quarter of fiscal 2026 marked a fundamental change in Jio Financial Services' business composition. Core business income experienced remarkable growth, increasing five-fold year-on-year to ₹317 crore. This represented a dramatic shift in revenue mix, with core operations now accounting for 52% of total earnings compared to just 14% in the previous year.

The company now generates substantial revenue from lending, payments, and insurance activities, moving away from its earlier dependence on interest and dividends from Reliance shares.

Lending Operations Scale Rapidly

Jio Credit, the company's lending division, demonstrated exceptional growth trajectory during the quarter. The lending arm concluded Q2 with assets under management of ₹14,712 crore, representing a twelve-fold increase from the previous year. During the quarter alone, the company disbursed ₹6,624 crore in loans.

The company benefits from competitive borrowing costs averaging 7.06%, supported by its strong balance sheet and brand recognition. This cost advantage enables favorable spreads between borrowing and lending rates, providing a significant edge over smaller non-banking financial companies.

Digital Distribution and Strategic Partnerships

Jio Financial Services leverages the MyJio app ecosystem for customer acquisition, tapping into the broader Jio telecom and retail user base. The digital platform serves approximately 18 million unique users across various financial products. Notably, about 40% of mutual fund inflows originate from B30 cities, demonstrating the platform's reach beyond major urban centers.

The company has established key strategic alliances to accelerate growth:

• BlackRock Joint Venture: A 50:50 partnership for asset management operations has gathered nearly ₹16,000 crore in assets within four months, incorporating artificial intelligence in fund management
• Allianz Partnership: Collaboration for life and general insurance combines international expertise with domestic distribution capabilities

Financial Position and Market Valuation

With a market capitalisation of approximately ₹1,90,000 crore, Jio Financial Services ranks among India's largest financial services companies. The stock, which listed in August 2023 at ₹265, currently trades near ₹296. Recent analyst coverage from Choice Broking set a target price of ₹350, suggesting an 18% upside potential.

Challenges and Growth Outlook

Despite operational progress, the company faces return on equity challenges, currently generating approximately 2% annualised returns compared to 15-20% typical for leading Indian banks. The company remains in an investment phase, with ongoing expenditure on technology, staffing, and physical infrastructure yet to fully translate into returns.

Analysts forecast revenue growth of 33.20% in fiscal 2026 and 14.20% in fiscal 2027, with net income expected to expand at similar rates. The stock currently trades at about 87 times forward earnings, with consensus estimates implying potential price appreciation of approximately 15.50%.

Jio Financial Services has made a strategic investment of ₹50.00 crore in its wholly owned subsidiary, Jio Leasing Services Limited (JLSL), through subscription to optionally convertible preference shares. The investment was disclosed to stock exchanges on December 23, 2025, under Regulation 30 of SEBI listing requirements.

Investment Structure

The company has subscribed to and been allotted preference shares with specific terms:

Cumulative Investment Details

This latest investment brings the total capital deployed in JLSL to significant levels:

Transaction Characteristics

The investment represents a related party transaction conducted on an arm's length basis. JLSL will utilize the funds to support its business operations and growth initiatives. The company confirmed that no governmental or regulatory approvals were required for this transaction.

Corporate Governance

Jio Financial Services has maintained transparency by promptly disclosing the investment details to BSE and NSE. The transaction was executed at 10:56 AM on the disclosure date, with no interest from promoters, promoter groups, or other group companies in this specific investment.

This strategic capital infusion demonstrates Jio Financial Services' continued commitment to strengthening its subsidiary operations and expanding its financial services ecosystem through targeted investments.