JIOFIN How Jio Financial Collects Reliance's Dividend Twice

One Dividend, Two Entities, One Quarter

Jio Financial's second quarter of FY25 (ended September 30, 2024) produced its largest consolidated PAT since listing: Rs. 689.07 crore, more than double Q1 FY25's Rs. 312.63 crore. On its face, that reads like real momentum. The mechanics underneath it tell a narrower story: Reliance Industries Limited's annual dividend landed this quarter, and JFS holds RIL shares through two separate structures inside its own consolidated group - Reliance Industrial Investments and Holdings Limited (RIIHL, a wholly-owned subsidiary, fully consolidated) and Reliance Services and Holdings Limited (RSHL, an associate, consolidated only via its profit share). Both entities received a RIL dividend this quarter. RIIHL's Rs. 240.94 crore shows up directly as "Dividend income" on the consolidated P&L; RSHL's own dividend income from its RIL stake shows up indirectly, folded into the Rs. 225.71 crore "Share of profit of Associates and Joint Ventures" line - which is itself up from just Rs. 61.92 crore last quarter, again almost entirely because of the same annual RIL dividend cycle. Add the two together and roughly Rs. 400+ crore of this quarter's Rs. 689 crore of PAT is one underlying event - RIL's dividend - counted through two different accounting presentations of the same 6.1% combined RIL stake.

This is the same pattern this site has now flagged across five quarters: JFS's PAT swings quarter to quarter mostly track its non-operating investment book (interest income, the RIL dividend cycle, fair-value marks), not its six licensed operating businesses. What's different, and genuinely worth noting, this quarter is Jio Finance Limited's loan book: it grew from Rs. 173.31 crore to Rs. 1,206.11 crore in a single quarter - a 7x jump. That's still a tiny number in absolute terms (well under 1% of JFS's Rs. 1,44,222 crore of total assets), and it followed a run of new product launches across the quarter (Home Loans, Loan Against Property, Loan on Securities, plus corporate lending: vendor financing, working capital, term loans, and invoice factoring). But it's the first quarter where an operating business, not the investment portfolio, produced the largest single percentage move in this company's results.

The Prescription

JFS should start reporting the NBFC's loan book with the same granularity it gives its treasury book - a breakdown by product (retail vs. corporate, secured vs. unsecured) and by vintage, now that the book has grown large enough (7x in one quarter) to matter to a reader trying to separate real lending traction from investment-portfolio noise. A company whose whole narrative is "watch the operating businesses scale" owes its audience the one data series that would actually let them watch that happen.

What it should stop doing: presenting the RIL dividend's flow through two separate P&L lines (direct dividend income via RIIHL, and associate profit-share via RSHL) without ever stating, in the same breath, that both movements trace back to the same underlying corporate action. Management's own call explained each line's driver correctly and separately - but a reader piecing together that "Share of Associates & Joint ventures" increased "primarily on account of the dividend received by RSHL on its investment in RIL shares" has to do real work to realize this is the same dividend cycle showing up twice, not two independent sources of strength.

Key Financial Metrics

Q2 FY25 (quarter ended September 30, 2024) vs. Q1 FY25 (quarter ended June 30, 2024), consolidated, reported in Rs. crore

FX: Rs. 83.83 = $1 (September 30, 2024 close, the last trading day of the quarter). A full balance sheet accompanies this filing, per SEBI's half-yearly requirement.

Metric	Q2 FY25 (Rs. cr)	Q2 FY25 ($)	Q1 FY25 (Rs. cr)	QoQ
Net Revenue (Total revenue from operations)	693.50	$82.7M	417.82	✅ +65.9%
Operating Income (PPOP¹, before share of Associates/JV)	547.78	$65.3M	338.47	✅ +61.8%
Net Income (PAT)	689.07	$82.2M	312.63	✅ +120.4%, mostly the RIL dividend cycle (see above)
Total Comprehensive Income	(8,148.15)	($972.1M)	6,144.51	⚠️ Swung to a loss on RIL fair-value marks
Total Cash	5,132.30	$612.2M	Not available last quarter	Down from Rs. 10,959.77 crore as of March 31, 2024

¹PPOP^» (Pre-Provisioning Operating Profit) is the industry-standard operating metric at an Indian bank/NBFC.

Total revenue's 65.9% QoQ jump is the dividend income (Rs. 240.94 crore, versus zero last quarter) arriving in full, plus interest income rising to Rs. 204.98 crore (from Rs. 161.74 crore) as CFO Abhishek Pathak attributed to "overall improvement in systemic liquidity, and corresponding fall in yields" lifting the treasury book's fair-value gains. Total expenses also rose, to Rs. 146.07 crore from Rs. 79.35 crore, which management attributed to scaling employee costs and a Rs. 14 crore CSR expense recognized this quarter - the first quarter this site has seen CSR called out as a specific expense driver, consistent with a company now large enough (and now profitable enough on a trailing basis) to have a meaningful CSR obligation under Indian company law. Total Comprehensive Income swung to a Rs. (8,148.15) crore loss this quarter - the mirror image of the large positive OCI swings recorded in the two prior quarters (Rs. 14,223.30 crore in Q4 FY24, Rs. 6,144.51 crore in Q1 FY25) - as the RIL equity stake gave back some of its unrealized gains. Six quarters into this company's life as a listed group, this OCI line has now swung meaningfully in both directions multiple times, and it continues to track RIL's own share price far more than anything in JFS's operating businesses.

The half-year cash flow statement shows net cash used in operating activities of Rs. (1,263.83) crore for H1 FY25 - a larger operating cash outflow than the full-year Rs. (677.57) crore recorded for all of FY24 (see last quarter's post), driven mostly by a Rs. 1,034.76 crore increase in loans as the NBFC's book scaled 7x this quarter. That's a healthy explanation for a growing lender (loan disbursements are a cash use before they become interest income) rather than a concerning one, but it's worth tracking as the loan book continues to grow.

Key Operational Metrics

This is the first quarter where an operating-business metric, not a treasury or investment-portfolio figure, produced the standout number:

• Loan book / AUM^» (Jio Finance Limited): Grew from Rs. 173.31 crore to Rs. 1,206.11 crore quarter-on-quarter - a 7x increase, following the launch of Home Loans (including balance transfer), Loan Against Property, Loan on Securities, and a suite of corporate products (vendor financing, working capital, term loans, invoice factoring) across the quarter.
• Payments bank (Jio Payments Bank): CASA^» customers grew to 1.5 million, up from just over 1 million last quarter. JFS also increased its ownership stake in the bank to 82.17% (from 78.95%), investing Rs. 68 crore during the quarter.
• App engagement: 6.5 million average Monthly Active Users across JFSL's digital properties in Q2 FY25 - up sharply from the ~0.5 million downloads disclosed as of mid-July, and boosted by the JioFinance app's integration into the MyJio app completed this quarter, giving JFSL access to MyJio's existing user base.
• Insurance (Jio Insurance Broking): Tie-ups with 31 insurance companies, offering 24 plans directly across auto, two-wheeler, health, and life. Health and life insurance both launched to direct customers this quarter, and an institutional Employee Benefit portal went live.
• Investment (JV with BlackRock): SEBI granted in-principle approval on October 3, 2024 for JFS and BlackRock to act as co-sponsors of a mutual fund - the clearest regulatory progress yet on the asset-management venture first announced in July 2023. A second BlackRock joint venture, Jio BlackRock Investment Advisers Private Limited, was incorporated on September 6, 2024 to pursue wealth management.
• Regulatory: The Department of Economic Affairs approved raising JFS's foreign investment (including FPI) ceiling to 49% of paid-up equity on a fully diluted basis.

As in every prior quarter, the Group's six licensed businesses still don't individually clear the Ind AS-108 "Operating Segment" disclosure threshold, so a reader still can't attribute this quarter's Rs. 693.85 crore of total income across them from the filed statements alone - though the standalone AUM disclosure for the NBFC is a step toward exactly that kind of granularity.

Beyond the Usual

The Same Dividend, Counted Through Two Entities in One Quarter

Reliance Industries' dividend flowed to JFS's consolidated results twice this quarter through two different presentations of the same underlying 6.1% combined RIL stake: Rs. 240.94 crore of direct "Dividend income" via RIIHL (a wholly-owned, fully consolidated subsidiary holding 3.56% of RIL), and a jump in "Share of profit of Associates and Joint Ventures" to Rs. 225.71 crore, which management's own call attributed to "the dividend received by RSHL on its investment in RIL shares" (RSHL being an associate holding a further 2.54% of RIL, consolidated only via profit-share). Both disclosures are individually accurate and neither is hidden - but nothing in the filed materials states plainly that these are the same corporate action (RIL's board declaring its annual dividend) landing through two different line items in the same quarter, which is exactly the kind of detail a reader comparing quarter-on-quarter PAT growth needs to know before treating this quarter's 120% jump as two independent sources of strength.

The Unreviewed-Component Pool Shrank to Immaterial This Quarter

Unlike the debut quarter and Q3 FY24, where this site flagged unreviewed associate/subsidiary figures running into tens of thousands of crores, this quarter's auditors' review report discloses only a genuinely immaterial unreviewed item - one subsidiary and associate combination with total assets of Rs. 0.01 crore and a share of loss of Rs. 0.01 crore for the half year, explicitly noted by the auditors as "not material to the Group." The five subsidiaries reviewed by other auditors (rather than JFS's own signing auditors) remain a much larger, if entirely standard, component - Rs. 1,03,161.86 crore of total assets as of September 30, 2024 - but that's reliance on component auditors' reports, a routine practice for a group this size, not the same governance concern as last year's genuinely unreviewed-by-anyone associate swing.

A Joint Statutory Auditor Rotated Out Mid-Year

CK SP and Co LLP, one of JFS's two joint statutory auditors since the company's listing, does not appear on this quarter's review report - Lodha & Co LLP continues, now paired with Deloitte Haskins & Sells rather than CK SP. The filing notes the standalone results for the quarter ended June 30, 2024 and the year ended March 31, 2024 were reviewed/audited "by the Joint Statutory Auditors, one of them being the predecessor audit firm," confirming the change happened between the FY24 annual results and this quarter without further explanation of the reason. Auditor rotation on its own is a routine governance event, not a red flag, but a swap mid-year (rather than at a natural year-end boundary) is worth noting for context in future quarters.

A Foreign Investment Ceiling Raised to 49%, Ahead of Any Stated Need

The approval to raise JFS's foreign investment (including FPI) limit to 49% of fully diluted paid-up equity is disclosed without any stated near-term plan to actually raise foreign capital or list depositary instruments - it reads as a precautionary regulatory headroom move rather than a signal of an imminent capital raise, consistent with a debt-free, well-capitalized company that isn't obviously short of capital today.

Management's Framing of the First Real Operating-Metric Quarter

CEO Hitesh Sethia's remarks devoted noticeably more time to specific operating numbers this quarter than in any prior call - the Rs. 1,206 crore loan book figure, the 1.5 million CASA count, and 6.5 million average MAUs were all stated explicitly, rather than described only qualitatively as in earlier quarters. That's a genuine shift toward the kind of operational transparency this site's Key Operational Metrics section has been asking for since the debut quarter. What the call still didn't do: connect the dividend-through-two-entities mechanics from Beyond the Usual into a single, plain explanation, even though CFO Abhishek Pathak's remarks separately named both drivers correctly. As with every quarter since listing, there was no analyst Q&A - the call again closed in listen-only mode.

Target Valuation Range

Fair-value range: roughly Rs. 216-270/share (~Rs. 1,37,100-1,71,400 crore, ~$16.4-20.5 billion), the ceiling widened slightly to reflect the loan book's 7x growth this quarter. At Rs. 350.60, JFS still trades above that ceiling - not cheap on any operating basis, though this quarter's loan-book growth is the first genuine data point in favor of the "the licensed businesses will eventually scale" thesis, rather than just management's roadmap.

JFS's share price moved from Rs. 358.15 at the end of June 2024 to Rs. 350.60 at the end of September 2024 (-2.1%) - a modest pullback that masks real intra-quarter softness: the stock fell to Rs. 321.70 by the end of August before partially recovering into September. No stock split has occurred since JFS's August 2023 listing.

Market cap / book value	Q2 FY2025 (Sep 2024)
Share price (period-end)	Rs. 350.60
Shares outstanding	6,353,284,188
Market capitalization	Rs. 2,22,746 crore (~$26.6B)
Book value (consolidated net worth)	Rs. 1,37,144 crore
P/B	~1.62x

Market cap is down from ~Rs. 2,27,543 crore last quarter, as the share-price pullback and the small net-worth decline (a function of this quarter's negative OCI, not a dividend payout) roughly offset each other in P/B terms.

Peer-multiple sanity check	Q1 FY2025 (Jun 2024)	Q2 FY2025 (Sep 2024)
P/B	~1.64x	~1.62x
Annualized ROE	~0.9%	~1.5%

Back up, though this quarter's own PAT (annualized alone) would imply closer to 2.0%, inflated by the one-off RIL dividend cycle discussed above rather than a genuine step-change in recurring profitability.

DCF / reverse DCF: Still not attempted. Six quarters in, the income statement remains dominated by treasury and investment income rather than a scaled operating business - though the loan book's 7x growth this quarter is the first evidence that a real, recurring, business-driven revenue stream may eventually be large enough to underpin one.

What would need to be true for the current price to look cheap: the loan book would need to keep compounding from this quarter's Rs. 1,206 crore base at a similar pace for several more quarters, the payments bank's 1.5 million CASA customers would need to convert into a real, low-cost deposit franchise, and the BlackRock asset-management and wealth-management ventures would need to clear their remaining approvals and launch - all while returns stay well above the ~1.5% ROE run-rate this quarter implies. Six quarters in, that case now has one genuine green shoot (the loan book) behind it, rather than resting purely on management's roadmap.

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