JIOFIN The Quarter the Lending Book Grew 12x

The Balance Sheet Is Finally Doing Something

For its first seven quarters as a listed company, Jio Financial Services' consolidated numbers were mostly a story about one giant equity stake (the inherited Reliance Industries shareholding) swinging in value while four licensed-but-mostly-dormant businesses waited to launch. That changed materially this quarter. Jio Credit Limited (JFS's NBFC, formerly Jio Finance Limited) reported Assets Under Management of Rs. 14,712 crore as of September 30, 2025 - up 12x from a year earlier - with Rs. 6,624 crore of fresh disbursements in the quarter alone. Meanwhile the four-month-old asset-management joint venture with BlackRock, Jio BlackRock Asset Management, already holds Rs. 15,980 crore of AUM, more than the NBFC itself, gathered almost entirely through index-fund NFOs. Two of JFS's six licensed businesses have gone from "sandbox" to genuinely large numbers within a single year - the loop the thesis always depended on ("license → capital → disbursement → repeat customers → more capital") is now visibly turning, not just promised.

None of that growth shows up as growth in the headline profit number, though: consolidated PAT was Rs. 695.04 crore, up just 0.9% year-on-year - because, as with every prior quarter, PAT is still dominated by dividend income and fair-value gains on the legacy equity portfolio rather than by the scaling lending and asset-management businesses. The gap between "the businesses are visibly working" and "the P&L barely shows it" is this quarter's real tension, and it is funded by something worth watching closely: a Rs. 15,825 crore warrant issue to two promoter-group entities (see Beyond the Usual below), the first tranche of which (Rs. 3,956.25 crore) landed on the balance sheet this quarter and is now visibly flowing into loan disbursements and debt-funded growth.

The Prescription

JFS should keep pushing capital into Jio Credit and Jio BlackRock AMC specifically, not spread it evenly across all six licensed entities - a 12x AUM year and a four-month-old JV already out-AUM-ing the seven-year-old NBFC is exactly the kind of early signal that should get more capital, not less, while the RBI-mandated Core Investment Company structure still lets JFS deploy group capital flexibly across subsidiaries. The insurance-broking and payments-bank businesses, growing but still modest by comparison (see Key Operational Metrics below), can wait their turn.

What it should stop doing: continuing to let consolidated PAT - still ~40% dividend and fair-value-gain income this quarter, not operating income from the businesses actually scaling - stand in as the headline number on the results slide without a segment-level P&L breakout to back it up. JFS has now disclosed genuinely large numbers for individual businesses (AUM, disbursements, NII) on the earnings call three years running, while its own filed financial statements still describe "investing & financing in India" as the company's sole reporting segment under Ind AS 108. A company happy to brag about segment-level numbers on the call but not disclose them in the audited statement is choosing the more flattering venue for its story, not the more accountable one.

Key Financial Metrics

Q2 FY26 (quarter ended Sept 30, 2025) vs. Q2 FY25 (quarter ended Sept 30, 2024) and Q1 FY26 (quarter ended June 30, 2025), consolidated, reported in Rs. crore

FX: Rs. 88.84 = $1 (September 30, 2025 close). No standalone balance sheet accompanies this filing - under SEBI's listing regulations, a full balance sheet is only required alongside half-yearly and annual results, so H1 FY26's cash-flow statement (below) is this quarter's substitute for a fresh Total Cash figure.

Metric	Q2 FY26 (Rs. cr)	Q2 FY26 ($)	Q2 FY25 (Rs. cr)	YoY	Q1 FY26 (Rs. cr)	QoQ
Net Revenue (Total revenue from operations)	981.39	$110.5M	693.50	✅ +41.5%	612.46	✅ +60.2%
Operating Income (PPOP¹, before share of Associates/JV)	565.90	$63.7M	547.78	✅ +3.3%	358.95	✅ +57.7%
Net Income (PAT)	695.04	$78.2M	689.07	⚠️ +0.9%	324.66	✅ +114.1%
Total Comprehensive Income	(8,970.05)	($1,009.7M)	(8,148.15)	⚠️ Larger loss	16,576.45	⚠️ Swung to a loss
Total Cash	233.54 (H1 FY26 closing balance)	$26.3M	Not available	-	352.32 (opening)	⚠️ -33.7%

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

The QoQ swings are still dividend-timing mechanics, the same pattern flagged in the Q3 FY24 post: dividend income was Rs. 268.97 crore this quarter versus zero in Q1 FY26, pushing PAT up 114% QoQ even as the two quarters' PPOP move in the same direction with the operating businesses. The more meaningful comparison is H1 FY26 versus H1 FY25: consolidated PAT of Rs. 1,019.70 crore, up just 1.8% over H1 FY25's Rs. 1,001.70 crore - essentially flat, despite total revenue from operations growing 43.4% (Rs. 1,593.85 crore vs Rs. 1,111.32 crore) over the same period. Revenue is compounding meaningfully faster than profit - the first real sign that funding costs for the new lending book (finance costs of Rs. 234.62 crore in H1 FY26, versus essentially zero a year earlier) are starting to bite into the bottom line, well before the scaling businesses have had time to mature into full profitability.

H1 FY26's cash-flow statement tells the growth story better than the P&L: net cash used in operating activities was Rs. 4,615.17 crore, driven almost entirely by a Rs. 4,651.76 crore increase in loans - the NBFC actually deploying capital into its book, not sitting on it. That operating cash outflow was funded by Rs. 9,880.47 crore of net financing inflows: the Rs. 3,956.25 crore first tranche of the promoter-group warrant issue (see Beyond the Usual), Rs. 2,113.54 crore of fresh debt securities, and Rs. 4,364.67 crore of net new borrowings. This is what a lender actually funding its growth looks like on a cash-flow statement - a meaningfully different picture from every prior JFS quarter, where the balance sheet mostly just sat on the inherited equity stake.

Two years into its life as a standalone company, JFS's headline PAT still tells you almost nothing quarter to quarter - it's the cash-flow statement and the segment-level AUM/disbursement numbers management discloses only on the call, not in the filed financials, that show the real story this quarter.

Key Operational Metrics

• Jio Credit (the NBFC) AUM: Rs. 14,712 crore as of September 30, 2025, up 12x year-on-year, with Rs. 6,624 crore of disbursements in the quarter. Net Interest Income Rs. 140 crore, up 142% YoY; standalone PAT ~Rs. 50 crore, up 62% YoY. Net worth Rs. 5,020 crore as of quarter-end.
• Jio BlackRock Asset Management AUM: Rs. 15,980 crore as of September 30, 2025 - already larger than the NBFC's book, gathered in roughly four months since its Index Funds' NFOs launched, with over 480,000 investors and 40% of retail AUM from B30^» cities.
• Jio Payment Solutions (payment aggregator) Transaction Processing Volume: Rs. 13,566 crore in the quarter, up 167% YoY; Rs. 21,286 crore for H1 FY26, nearly matching all of H1 FY25.
• Jio Payments Bank deposits: Rs. 421 crore, roughly double the Rs. 209-crore deposit base a year earlier.
• Jio Insurance Broking: Rs. 347 crore of premium collected in the quarter; 2.9 lakh policies issued.
• All still reported under a single consolidated "investing & financing" segment in the filed financial statements (see The Prescription above) - these operational figures come only from the earnings call and presentation, not the audited numbers.

Beyond the Usual

A Rs. 15,825 crore warrant issue to the promoter group, on just 25% cash down

The Board approved raising up to Rs. 15,825 crore through the issuance of 50 crore warrants at Rs. 316.50 each, convertible into equity within 18 months of allotment. All 50 crore warrants were allotted on a preferential, private-placement basis - 25 crore each - to Sikka Ports & Terminals Limited and Jamnagar Utilities & Power Private Limited, both entities forming part of JFS's own promoter group, against just 25% of the issue price (Rs. 3,956.25 crore) upfront. The remaining 75% (Rs. 11,868.75 crore) is only payable if and when the warrants convert. Related-party preferential warrant issues to a promoter group are a standard, disclosed financing tool at Indian conglomerates, not inherently a governance problem - but a structure that lets the promoter group commit to a large capital raise for only a quarter of the cash today, with the conversion price and timing entirely at their discretion over the next 18 months, is worth tracking for how (and whether) the remaining 75% actually shows up, and at what eventual price relative to the market at conversion time.

Two new joint ventures launched with Allianz for reinsurance and, in the pipeline, general/life insurance

JFS and Allianz Europe B.V. incorporated Allianz Jio Reinsurance Limited on September 8, 2025 (each partner contributing Rs. 0.03 crore in equity and Rs. 1.52 crore in share-application money, pending allotment), alongside a signed but still non-binding term sheet to also set up equally-owned general and life insurance joint ventures - a seventh and potentially eighth licensed business added to JFS's roster within two years of listing, well beyond the four (lending, insurance broking, payments bank, payment aggregation) it originally launched with.

Jio Payments Bank became a wholly-owned subsidiary, closing out the last joint-venture stake

During Q1 FY26, JFS bought State Bank of India's remaining 14.96% stake in Jio Payments Bank for Rs. 104.54 crore, making JPBL a full subsidiary rather than a 50:50 JV. The resulting fair-value gain on remeasurement (Rs. 439.16 crore) less the goodwill recognized (Rs. 410.59 crore) shows up as this quarter's Rs. 28.57 crore exceptional item - a one-off accounting entry from consolidation, not from any operating change at the payments bank itself.

Management's Framing: A Deliberate Pivot to "Prime and Near-Prime" Lending

CEO Hitesh Sethia's opening remarks leaned hard on the phrase "growth and prudence can co-exist" - a direct response to the market's standing worry that a fast-scaling new NBFC (12x AUM growth in a year) is taking on credit risk it can't yet price. He repeatedly tied Jio Credit's growth to a "prime and near-prime" customer focus and "risk-calibrated" underwriting, and pointed to provisions for expected credit losses^» tracking in line with book growth (Rs. 13 crore this quarter) as evidence the growth isn't outrunning the risk framework. What the call didn't address: the Rs. 15,825 crore warrant issue to the promoter group (see Beyond the Usual above) was mentioned only as a funding-source fact ("received the first tranche of Rs. 3,956 crores"), with no discussion of dilution, pricing rationale, or why a preferential related-party issue was chosen over a rights issue or public offering open to all shareholders.

Coverage Table

Metric	Q2 FY26	Q2 FY25	YoY	Why it matters
Jio Credit AUM	Rs. 14,712 cr	~Rs. 1,226 cr (implied by "12x")	✅ ~12x	The lending business is now a real, material book, not a pilot
Jio BlackRock AMC AUM	Rs. 15,980 cr	N/A (JV launched ~4 months earlier)	New	Already bigger than the NBFC, from a standing start
H1 FY26 PAT	Rs. 1,019.70 cr	Rs. 1,001.70 cr	⚠️ +1.8%	Nearly flat profit despite AUM/revenue growing far faster - funding costs are starting to bite
Operating cash flow (H1)	(Rs. 4,615.17) cr	(Rs. 1,263.83) cr	⚠️ Deeper outflow	The clearest sign yet that capital is actually being deployed into loans, not parked

Target Valuation Range

Fair-value range: still roughly Rs. 194-253/share (~Rs. 1,23,500-1,60,500 crore, ~$13.9-18.1 billion) on the last audited book value. At Rs. 293.20, JFS trades above that ceiling - still too early to price with real confidence, but the case for a credible DCF is now visibly closer than at any prior quarter - two licensed businesses have finally produced large, verifiable numbers (AUM, NII, disbursements) instead of only promises, even though none of that yet appears as a proper segment P&L in the filed statements.

JFS's share price fell from Rs. 326.75 at the end of June 2025 to Rs. 293.20 at the end of September 2025, down 10.3% over the quarter - a meaningful move, but within the stock's normal range over the trailing two years (it ranged from roughly Rs. 207.61 in February 2025 to Rs. 377.00 in April 2024, a swing of over 80% peak-to-trough), so this isn't treated as a standalone dedicated section; the decline tracks a broader pullback across Indian financials in the quarter more than anything specific to this result.

Market cap / book value	Q2 FY2026 (Sep 2025)
Share price (period-end)	Rs. 293.20
Shares outstanding	~6,353,141,623
Market capitalization	~Rs. 1,86,229 crore (~$21.0B)
Book value (last audited, Mar 2025)	Rs. 1,23,496.52 crore
P/B (stale denominator)	~1.51x

No fresh consolidated balance sheet accompanies this quarter (see Key Financial Metrics above) - two quarters of loan-book growth aren't reflected in it.

Peer-multiple sanity check	Q1 FY2026 (Jun 2025)	Q2 FY2026 (Sep 2025)
P/B	~1.48x	~1.51x
Annualized ROE	~0.93%	~1.7%

Essentially unchanged from a year ago, because the balance sheet's investment portfolio (still the overwhelming majority of consolidated assets) dwarfs the earnings the newly-scaling lending business generates on it.

DCF / reverse DCF: Still not attempted. Jio Credit and Jio BlackRock AMC have real, disclosed numbers for the first time, but neither is broken out as its own segment in the audited financials (see The Prescription), so a multi-year cash-flow projection would have to lean on unaudited call disclosures rather than filed numbers - not yet a foundation solid enough for a number this site would stand behind.

What would need to be true for the current price to look cheap: Jio Credit's AUM growth would need to keep compounding at anything close to this pace for several more years without a meaningful deterioration in credit quality, Jio BlackRock AMC's early AUM gathering would need to convert into durable fee income rather than one-time NFO enthusiasm, and JFS would need to start disclosing genuine segment-level profitability so a reader can verify the pieces add up to the consolidated PAT, rather than trusting the call commentary on faith.

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