The Same Dividend Trick, Two Years Later
This is the third time this site has had to write this sentence about Jio Financial Services: consolidated PAT fell sharply quarter-on-quarter - 61.3%, from Rs. 695.04 crore to Rs. 268.98 crore - almost entirely because dividend income, which was Rs. 268.97 crore last quarter, was zero this quarter. It is the identical mechanic flagged in the Q3 FY24 post over two years ago, and the identical mechanic flagged again just last quarter: dividend timing on the legacy Reliance Industries equity stake, not any change in the actual licensed businesses, drives the swing. The year-on-year comparison, which strips out this quarter-to-quarter dividend noise (neither Q3 FY26 nor Q3 FY25 received a dividend), is both more stable and more interesting: PAT actually fell 8.8% YoY (Rs. 268.98 crore vs. Rs. 294.78 crore), even as total revenue from operations more than doubled - up 105.6% YoY, from Rs. 438.35 crore to Rs. 900.90 crore.
That divergence - revenue up over 2x, profit down - is the real story worth sitting with, not the QoQ swing. Finance costs, near-zero a year ago, reached Rs. 212.38 crore this quarter (up from nothing in Q3 FY25 and up further from Rs. 135.82 crore last quarter), the direct cost of funding Jio Credit's now-scaling loan book with debt rather than equity. Nine-month PAT for FY26 came in at Rs. 1,288.68 crore, essentially flat against FY25's Rs. 1,296.48 crore (-0.6%) - a business generating meaningfully more revenue and lending activity than a year ago, at a bottom line that hasn't moved. The lending book scaling up (see the last post for the 12x AUM growth) is starting to cost real money to fund, and that cost is now large enough to be visible in the consolidated numbers, not just in the cash-flow statement.
The Prescription
JFS needs to start pairing every disclosure of loan-book AUM growth with the cost of funding it, in the same breath - a reader who only follows the earnings-call narrative (AUM up 12x, disbursements accelerating) would have no idea that finance costs have gone from effectively zero to over Rs. 200 crore a quarter and are now large enough to offset most of the revenue growth at the PAT line. That's not a criticism of the growth itself - a young NBFC funding a loan book with debt is completely normal - it's a criticism of a company that still hasn't disclosed a segment-level P&L (see the last post's Prescription) that would let a reader see the lending business's actual net interest margin» after funding costs, rather than inferring it from consolidated finance-cost movements.
What it should stop doing: continuing to let a dividend-timing quirk on a legacy equity stake dominate the quarter-on-quarter PAT headline, three separate quarters running, without ever addressing it directly in the earnings presentation or call. Management has had two years and three occurrences of this exact pattern to simply state, up front, "PAT will swing with dividend timing on the Reliance stake; look at revenue from operations and PPOP» instead" - and still hasn't.
Key Financial Metrics
Q3 FY26 (quarter ended Dec 31, 2025) vs. Q3 FY25 (quarter ended Dec 31, 2024) and Q2 FY26 (quarter ended Sept 30, 2025), consolidated, reported in Rs. crore
FX: Rs. 89.77 = $1 (December 31, 2025 close). No standalone balance sheet accompanies this filing - the same SEBI half-yearly/annual-only requirement flagged in the Q3 FY24 post applies again this quarter, so total cash isn't available.
| Metric | Q3 FY26 (Rs. cr) | Q3 FY26 ($) | Q3 FY25 (Rs. cr) | YoY | Q2 FY26 (Rs. cr) | QoQ |
|---|---|---|---|---|---|---|
| Net Revenue (Total revenue from operations) | 900.90 | $100.4M | 438.35 | ✅ +105.6% | 981.39 | ⚠️ -8.2% |
| Operating Income (PPOP, before share of Associates/JV) | 335.13 | $37.3M | 318.14 | ✅ +5.3% | 565.90 | ⚠️ -40.8% |
| Net Income (PAT) | 268.98 | $30.0M | 294.78 | ⚠️ -8.8% | 695.04 | ⚠️ -61.3% |
| Total Comprehensive Income | 14,869.95 | $1,656.6M | (18,181.80) | ✅ Swung to a gain | (8,970.05) | ✅ Swung to a gain |
| Total Cash | Not available this quarter | - | - | - | - | - |
Nine-month (9M FY26) figures put the quarter in better context than either single comparison: total revenue from operations of Rs. 2,494.75 crore, up 61.0% over 9M FY25's Rs. 1,549.67 crore, against PAT of Rs. 1,288.68 crore, down 0.6% over the same period's Rs. 1,296.48 crore. The gap between those two growth rates is entirely attributable to finance costs, which went from Rs. 0 in 9M FY25 to Rs. 447.00 crore in 9M FY26 - a cost category that simply didn't exist a year ago and is now large enough on its own to explain most of the difference between revenue growth and profit growth.
Three quarters into tracking this exact dividend-timing pattern, the takeaway is now settled: JFS's QoQ PAT swing is noise, not signal. What's actually changed this quarter is that debt-funding costs for the lending book have grown large enough to matter at the consolidated level - the first real drag this business has shown from scaling up Jio Credit.
Key Operational Metrics
Management's Q3 FY26 call disclosed less operational granularity than the prior quarter (no updated Jio Credit AUM or Jio BlackRock AMC figures were given on this call), so this section is thinner than usual - stated plainly rather than filled with stale Q2 numbers:
- Jio Credit AUM / Jio BlackRock AMC AUM: Not updated this call. Last disclosed: Rs. 14,712 crore and Rs. 15,980 crore respectively, both as of September 30, 2025 (see the Q2 FY26 post).
- Consolidated finance costs: Rs. 212.38 crore this quarter, up from Rs. 135.82 crore last quarter and effectively zero a year ago - the clearest available proxy for how much debt-funded lending-book growth is now costing.
- Still reported under a single consolidated "investing & financing" segment in the filed financial statements - unchanged from every prior quarter.
Beyond the Usual
New labour-law legislation forced an immediate, one-off cost recognition
A new set of Indian federal labour codes (the Code on Wages 2019, Industrial Relations Code 2020, Code on Social Security 2020, and Occupational Safety Code 2020) was notified by the Government of India on November 21, 2025. Under Ind AS 19 (Employee Benefits), a legislative change to benefit-plan rules counts as an immediate plan amendment requiring instant cost recognition, rather than being spread over future periods - so JFS recognized an estimated Rs. 1.95 crore in past-service costs this quarter, flowing through employee-benefits expense, even though the underlying implementation rules for the new codes haven't been finalized yet. A small number in absolute terms, but a clean example of how external legislative timing, not business performance, can move a line item on the P&L in a single quarter.
The warrant issue to the promoter group, still on track and unchanged
The Rs. 15,825 crore warrant issue to Sikka Ports & Terminals and Jamnagar Utilities & Power (flagged as a related-party item worth tracking in the last post) is reiterated this quarter with no new development: the same 25 crore warrants each, allotted September 3, 2025, on the same 25%-upfront terms. Nothing has changed, which is itself the relevant fact - the remaining 75% (Rs. 11,868.75 crore) is still entirely at the promoter group's discretion to pay, or not, within the 18-month conversion window.
Management's Framing: A Quiet Quarter, No New Numbers Volunteered
This call ran noticeably lighter on hard operational disclosure than the prior two quarters - no fresh AUM, disbursement, or deposit figures were offered for Jio Credit, Jio BlackRock AMC, or Jio Payments Bank, a departure from the detailed segment-level color management volunteered in Q2 FY26 (see the last post). Management's framing instead leaned on the nine-month growth numbers (revenue, PAT) rather than addressing the quarter-on-quarter PAT decline directly - the same dividend-timing mechanic flagged three times now (see Beyond the Usual above and the opening section) went unmentioned on the call, exactly as in every prior quarter it's occurred.
Coverage Table
| Metric | Q3 FY26 | 9M FY26 | 9M FY25 | Why it matters |
|---|---|---|---|---|
| Total revenue from operations | Rs. 900.90 cr | Rs. 2,494.75 cr | Rs. 1,549.67 cr | ✅ +61.0% YTD - the underlying businesses are genuinely growing |
| PAT | Rs. 268.98 cr | Rs. 1,288.68 cr | Rs. 1,296.48 cr | ⚠️ -0.6% YTD - profit hasn't followed revenue up |
| Finance costs | Rs. 212.38 cr | Rs. 447.00 cr | Rs. 0 cr | ⚠️ New cost category, now large enough to explain most of the revenue/profit gap |
Target Valuation Range
Fair-value range: unchanged at roughly Rs. 194-253/share (~Rs. 1,23,500-1,60,500 crore, ~$13.8-17.9 billion). At Rs. 294.95, JFS still trades above that ceiling - still too early to price with confidence, and this quarter adds a genuinely new caution (rising finance costs eating into revenue growth) rather than removing one.
JFS's share price rose slightly from Rs. 293.20 at the end of September 2025 to Rs. 294.95 at the end of December 2025 (+0.6%) - not a meaningful move, and well within the stock's normal range over the trailing two years (Rs. 207.61 to Rs. 377.00), so no dedicated stock-price section is warranted.
| Market cap / book value | Q3 FY2026 (Dec 2025) |
|---|---|
| Share price (period-end) | Rs. 294.95 |
| Shares outstanding | ~6,353,141,623 |
| Market capitalization | ~Rs. 1,87,357 crore (~$20.9B) |
| Book value (last audited, Mar 2025) | Rs. 1,23,496.52 crore |
| P/B (stale denominator) | ~1.52x |
Still a stale-denominator estimate given three more quarters of loan-book growth since the last audited figure.
| Peer-multiple sanity check | Q2 FY2026 (Sep 2025) | Q3 FY2026 (Dec 2025) |
|---|---|---|
| P/B | ~1.51x | ~1.52x |
| Annualized ROE | ~1.7% | ~1.4% |
Down slightly, consistent with profit growth lagging revenue growth this quarter.
DCF / reverse DCF: Still not attempted, for the same reason as last quarter - Jio Credit and Jio BlackRock AMC still aren't broken out as their own segments in the audited financials, and this quarter's call offered less operational disclosure than the last, not more.
What would need to be true for the current price to look cheap: the same conditions as last quarter (see the Q2 FY26 post), with one addition - finance costs on the growing loan book would need to stabilize as a share of revenue rather than keep climbing, or the margin compression visible this quarter becomes a multi-year drag rather than a temporary funding-cost bump.
Jio Financial Services Limited's Unaudited Financial Results (Consolidated and Standalone) for the quarter and nine months ended December 31, 2025, with the Independent Auditors' Review Reports and notes to the accounts; the accompanying analyst presentation; and the transcript of the January 15, 2026 analyst call, all filed with BSE and NSE on or around January 15, 2026.