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Exploring the Prospects: Should You Consider Long-Term Investment in Jio Financial Services Limited?

 On July 20, 2023, Jio Financial Services went solo, breaking away from its parent company, Reliance Industries. Just a month later, it made its debut on the stock market. Talk about a swift move, right?

As it stepped onto the trading floor, Jio Financial Services flexed its financial muscles with a market capitalisation of a staggering Rs 1,700 billion. That's a lot of zeros! It quickly claimed its spot as the third-largest non-banking finance company (NBFC) in India, just behind Bajaj Finance and Bajaj Finserv.

jio financial services limited

Mukesh Ambani, the head honcho of Reliance, laid out some bold plans for this new finance player at their 46th annual general meeting. Jio Financial Services wasn't just here to play; it had ambitions to shake up the financial services industry.

But the big ripple in this pond was the effect on Bajaj Finance. They probably didn't see it coming. With Jio Financial Services in the NBFC arena, they now had a new rival. Shares of Bajaj Finance took a hit, falling nearly 7% in just one month after the demerger news. Even after Reliance's AGM, they dipped by 1%. The competition was heating up!

Now, let's get to the good stuff. Bajaj Finance is a heavy hitter in the NBFC game, boasting a customer base of a whopping 73 million. They're like the cool kid on the financial block, offering loans, mortgages, and more. They even have a couple of fancy subsidiaries for home loans and brokerage services.

Jio Financial Services, on the other hand, isn't into taking deposits from folks like you and me. Nope, they're a non-deposit-taking NBFC. But that's not stopping them from going all out. They've got plans to dive into retail lending, digital payments, insurance, broking, and asset management through their subsidiary squad.

Speaking of squad goals, they've teamed up with BlackRock to kickstart their asset management venture. But can this newbie take on the established players like Bajaj Finance and the nimble startups like Zerodha and Paytm?

When it comes to revenue growth, Bajaj Finance has been on a roll, with a 19.5% compound annual growth rate over the last five years. Meanwhile, Jio Financial Services' revenue has been doing the opposite - going down. They're making money mainly through investments, not their core services.

Profit margins? Bajaj Finance has seen those margins steadily rise, thanks to various income streams. Jio Financial Services, well, they're still warming up. They'll show their profit game when their core services kick in.

Dividends? Bajaj Finance shares the wealth with its shareholders, consistently paying out dividends. Jio Financial Services just started handing out some pocket changes in 2023.

Return on equity? Bajaj Finance has been doing a solid job with a 17.3% average over the past five years. Jio Financial Services? Not so much at 0.4%.

Valuation time! Bajaj Finance looks pretty chill with its P/E and P/Bv ratios, but Jio Financial Services seems to have had too much caffeine in the P/E department. Investors seem to be expecting some magic tricks.

So, what's the future look like? Bajaj Finance is expanding its territory, adding new products and aiming for a customer base of 100 million. They're like the seasoned pro who keeps levelling up.

Jio Financial Services, though, has grand plans and a massive customer network thanks to its retail and telecom businesses. They're eyeing blockchain and central bank digital currency. They're like the newcomer who's ready to shake things up.

In the end, Bajaj Finance is the heavyweight champ, with a strong track record and solid fundamentals. Jio Financial Services is the underdog, full of ambition and potential but still finding its footing.

So, which is better? It depends on your investment style and risk tolerance. Just remember, in the world of finance, there are no guarantees. Choose wisely, and may your investments be ever in your favour!


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