Jio Financial Services: A Long-Term Bet for the Patient Investor?

Introduction

You must have probably heard of Jio Financial Services. Some time back I blogged about its negative price movement of -40% from its peak. In that post there was reference about a JV between Jio Finance and BlackRock. This post will focus more on the JV and try to understand the benefits of it for Jio Finance and also its shareholders.

It’s only been a little over a year since it got listed in the NSE and BSE (August 2023). From its peak in Apr’2024, the stock has corrected by about -40% till now. It is trading at a price band close to its post-IPO listing price. Moreover, its valuation also look super expensive. It is trading at a P/E ratio of 91 right now.

So, if you’re a long-term investor, should you even bother to look at such a stock?

So, in this post I’ll try to answer just that. Because for me there are two positives about this company that attracts investors attention:

• Reliance Industries (RIL) Backing: RIL is a behemoth which has insane amount of cash (or ability to raise cash – debt, etc). It could have diversified into any sector, but it chose to venture into Finance through Jio Finance.
• BlackRock: It is the world’s largest asset manager (~$10 trillion AUM), focused on investment management and ETFs (like iShares). This company could have collaborated with banks, financial institutions, Tata’s, your pick, Anyone would have happily collaborated with BlackRock. It has that kind of reputation. But it did JV with Jio Finance which is a big thumbs-up. But the question is why? Jio has something unique which BlackRock could not find anywhere else. We’ll discuss this point also in this article.

To get a better perspective, let’s first try to understand why RIL picked the finance sector as their new line of business in India.

Why Reliance Chose Finance Sector

Reliance Industries is a behemoth with deep pockets and a huge ability to raise cash through debt. It has a history of disrupting consumer-facing sectors like telecom (with Jio Telecom) where it reached over 400 million users (read here).

It seems likely they saw finance as a natural extension, using this massive user base to cross-sell products like loans, insurance, and mutual funds.

The digital infrastructure from Jio, known for low-cost, high-scale models, fits well with financial services, especially in a country where digital adoption is surging. This adoption trend is evident from the way people are engaging with digital payments which is projected to hit $10 trillion by 2026 (Check this infographic to understand the growth of Financial Services Industry in India).

India’s financial sector is only shallowly penetrated till date. For example, mutual fund’s penetration is only 16% versus global average of 63%. A company like RIL might have seen it as a goldmine for growth.

On another side, financial adoption is driven by rising incomes and rural economy expansion.

Seeing the financial sector from the business model perspective, it is less capital-intensive than manufacturing or healthcare. Alternative sectors would have required RIL to invest more to build the business (assets mobilisatione etc).

So, these three factors: Jio’s user base, market being shallowly penetrated, and less capital-intensive nature of the business might have contributed in RIL selecting the financial sector over others. Moreover, on the way, they may have also got support from foreign investors like BlackRock which further encouraged them to go full throttle.

Jio Financial – The Start

Jio Financial Services is not any other start-up. It’s a spin-off from Reliance Industries (led by Mukesh Ambani’s) that’s already changed how we use phones and data with Jio.

When Jio Finance got listed, it wasn’t starting from scratch. It came with the Reliance DNA, big ambitions, deep pockets, and a knack for shaking things up.

What is the company’s game plan? To become a one-stop shop for financial services in India. They will deal with:

• Loans,
• Insurance,
• Wealth management, and
• Mutual Funds (thanks to BlackRock)

The BlackRock partnership is a big deal for Jio Finance

Back in July 2023, they announced a 50:50 joint venture to enter India’s asset management space.

Each put in $150 million as a start-up capital. Just last week, on April 3, 2025, we heard they’ve pumped in another Rs.66.5 crore each into their advisory arm, Jio BlackRock Investment Advisers (read here).

Then there’s also an update on the mutual fund front. SEBI gave Jio Finance & BlackRock the green light in October 2024 to “co-sponsor” a fund.

The term “co-sponsors” refers to both companies acting as the primary promoters or financial supporters behind the mutual fund. This will ensure that it meets SEBI’s regulatory and capital requirements. Once the company will become operational, this JV joint called Jio BlackRock, would function as a “fund house.”

This isn’t just small talk; it’s a sign Jio Finance is serious about building something massive.

The Jio Finance vision is a “digital-first” approach. It makes investing easy and affordable for us regular folks.

But consider this, if you want to start a SIP in say an equity fund for long term. After researching for the best equity mutual funds to invest in 2025, you came up with the names of these fund houses: Quant, Parag Parikh, HDFC, ICICI Pru, Jio, and Nippon. Out of these names, which name you are most likely to pick as your reliable fund house? With my money, I’ll be more inclined to go with HDFC or ICICI Pru.

But consider this alternative, in place of “Jio” now it is “Jio BlackRock.” Now, you will think twice before eliminating Jio Finance from your choice.

I think, the promoters of Jio Finance knew this that when it comes to wealth management and mutual funds, they will need something more than just the Reliance Industries brand name. Hence, they have made the JV with BlackRock.

I personally think that it is a very wise move. There is another disruptor up in the making.

How will be the Next Decade For Jio Financial?

Where could Jio Financial be in 2035?

As a long-term investor, you’re not here for quick bucks. You want to know if this company’s got the legs to run for decades together and compound your wealth on the way.

I think it does, and here’s why.

India’s financial services sector is an industry full of opportunities. More of us are earning, saving, and looking to invest, but we face issues in doing so. The available options are either too confusing or expensive (for many). Jio Finance is betting on digital platforms to change that.

With Reliance’s Jio network already reaching every corner of the country, they’ve got a ready-made customer base, hundreds of millions of people who already trust the brand. Add to it the BlackRock’s trust and expertise. People who invest small, for them the brand name Jio is good enough. But for other (from where the major chunk of investments will come), the BlackRock label will be a big driving factor. BlackRock is already managing trillions of dollars globally. So, this collaboration between Jio and BlackRock is like a partnership made in heaven.

Over the next decade, I see Jio Finance expanding beyond mutual funds into personal loans, insurance, and maybe even digital banking. They’ve already got a non-banking financial company (NBFC) license, so lending could become a cash cow.

What about the fundamentals of Jio Finance?

They’re still taking shape.

Right now, Jio Finance is more about potential than profits. Revenue streams are just starting to flow. But give it 5-7 years, and I’d think we’ll see steady income from asset management fees, loan interest, and insurance premiums.

The BlackRock JV alone could manage billions in assets if it captures even a slice of India’s mutual fund pie.

But how the JV executes its plans will make or break their future. They must scale fast and keep costs low. Can they do it? I think, if Jio telecom is an example, they’re not afraid to play the long game, even if it means burning cash upfront to grab market share.

The Valuation Puzzle: A P/E of 91

Like me, you’ve probably scratched your head wondering why Jio Financial is trading at Rs.224 a share when earnings are still thin.

Here’s how I’m making sense of it as a stock investor.

• First, Jio Finance has got the Reliance’s backing. Now, with Reliance as its promoter, Jio Finance is carrying a credibility and resources most newbies can only dream of. This is one reason why it is catching investor’s attention so much leading to such high PE expansions.
• Moreover, the market isn’t pricing today’s profits, it’s pricing tomorrow’s promise. For many, Jio Finance will be the next Jio (telecom business). When Jio started, people doubted how they’d make money giving free data becase the company was making losses in tons. But today, Jio is a market leader with decent cash flow and good profits. Similarly, Jio Finance today is in that early “investment mode.” Most companies (see Zomato, Swiggy, Nyka, PayTM, etc) in this stage are PAT negative. Jio is profitable but low in PAT. Hence, its PE is so high.

So now that we have justified the high PE of Jio Finance, let’s look at its potential downsides.

A P/E of 91 means investors are paying a premium for every rupee of earnings. Compare that to, say, Bajaj Finance (similar business strategy like Jio Finance) with a P/E around 35. It is only obvious to wonder if Jio Finance is overhyped. I think bit of both, hype and hope. Hype because of the current PE, and hope because if BlackRock effect starts to take effect, that PE is will come down drastically.

But as a long-term investor, you don’t need to panic. If the stock is expensive today it doesn’t mean that it will remain overpriced forever. If Jio Finance delivers on growth, that P/E could drop as earnings catch up. Check the below section for more clarity

P/E Contraction Due To PAT (EPS) Expansion

Jio Financial	Current	After 10 Years	Remark
PAT	530	15,983	Assuming, it matches Bajaj Finance current PAT of Rs.15,983
P/E	270	35	Assuming, it matches Bajaj Finance current PE of 35
EPS (Rs./Share)	0.83	25.03	Assuming a shares outstanding number of about 638.55 Crores
Share Price (Rs./Share)	224	876	In next 10 Years, share price will grow at about 14.61% CAGR

As on date, Net Profit (TTM) of Jio Financial is about Rs.530 crores (In FY-2023-24, PAT was Rs.1,600 crore). About ten years back, Bajaj Finance was also at these PAT levels.

I’m assuming that, in next 10 years, Jio Finance will become what Bajaj Finance is today. It means, after 10 years from now, Jio Financial’s PAT will become close to Rs.15,983 crores (Bajaj Finance’s today PAT). At a current shares outstanding numbers of 638.55 crores, after 10 years, EPS of Jio Finance will be about Rs.25 per share.

Also, assuming that after 10 years, there will be a P/E contraction for Jio Financial and it will fall to 35 levels (Bajaj Finance’s today PAT). It means that, at that time, the share price of Jio will be around Rs.876 per share (= PE35 x EPS25).

For this to happen, the share price of Jio Finance should grow at a CAGR of 14.61% (from Rs.224 to Rs.876 levels). Which sounds a fair price growth rate.

Moreover, consider the below table as well, it shows why Jio Financial has the capability to grow may be even faster than Bajaj Finance. So, our estimation of 14.61% CAGR for share price may even exceed.

Factor	Jio Financial Services	Bajaj Finance
Loans	Yes (retail, secured lending, leasing)	Yes (consumer, SME, home loans)
Insurance	Yes (plans to expand into life, general)	Yes (via Bajaj Allianz)
Mutual Funds	Yes (via BlackRock JV, SEBI approved)	No (Bajaj Finserv is the parent company who does it)
Wealth Management	Yes (via BlackRock JV for broking)	Yes (but only advisory services)
Customer Base	400M+ (Jio telecom, Reliance Retail)	88M+ (own retail network)
Global Firm Backing	Yes (BlackRock)	No (standalone, Bajaj Group)

Should You Hold On for 10 Years or More?

[Note: This is not a financial advice. I’m just sharing my perception of Jio Finance. I’m not trying to influence your decision as my view can be biased. Consult your financial advisor if you need.]

I’ll be a patient investor or not?

I think, Jio Financial is an interesting bet. If one has the stomach for some ups and downs, they can buy and hold. But remember to keep the holding time very long.

For sure, it is not a safe, boring stock like blue chips, it has growth story with big dreams.

The Reliance-BlackRock combo could redefine how we people will invest in times to come. The key is, if they can really reach the the masses as they did with Jio Telecom.

Over a decade, I see a solid business in the making with fundamentals strengthening as it scales.

But don’t ignore the risks. Execution isn’t guaranteed. The competition is fierce, and the regulatory hurdles could slow them down.

There is also a concern of valuation. If someones buys it at a PE multiple of 91, what upside he/she can expect. It is one major risk associated with this stock. Buying at these high valuation means you’re banking on them hitting their targets. If they stumble, the stock could take a hit.

What I’ll do? I may decide to hold Jio Financial as a piece of my portfolio. I’ll Pair it with some steady players so in case my assumptions prove wrong, I’ll be saved by other stocks in my portfolio.

Have a happy investing.