Jio Financial Services achieves a market capitalization of Rs 2 lakh crore as Reliance Industries Limited (RIL) hits a new all-time high

Driven by a 35 percent surge in its share price this year, Jio Financial Services Ltd achieved a market capitalization surpassing Rs 2 lakh crore for the first time. Additionally, on February 23, its parent company Reliance Industries Limited also reached a record high.

At 10:30 am, shares of Jio Financial Services surged 8 percent to reach a record high of Rs 326. This marked the fifth consecutive session of gains for the stock, which climbed nearly 17 percent during this period, reaching a market capitalization of Rs 2.08 lakh crore.

Meanwhile, RIL achieved an intraday record high of Rs 2,989. On the BSE, the stock was trading at Rs 2,978, reflecting a 0.5 percent increase from its previous close.

Presently, 39 companies boast a market capitalization exceeding Rs 2 lakh crore on local stock exchanges. Reliance Industries leads the pack with a market cap of Rs 20.05 lakh crore, followed by Tata Consultancy Services and HDFC Bank with market caps of Rs 14.78 lakh crore and Rs 10.78 lakh crore, respectively.

In its December quarter earnings report, Jio Financial posted a net profit of Rs 293 crore and a net interest income of Rs 269 crore. Its total interest income amounted to Rs 414 crore, with total revenue reaching Rs 413 crore.

Jio Financial is pivoting towards secured lending, exercising caution with unsecured products in the current market environment. It plans to bolster its secured lending arm with two new offerings: Device-as-a-service, facilitating operating and financing leases for gadgets like Airfiber, phones, and laptops via its subsidiary Jio Information Aggregator Services Ltd, and supply-chain financing, a short-term loan product aimed at addressing suppliers’ working capital needs, slated to roll out in the coming quarters, as per a B&K Securities report.

In January, Jio Financial Services, along with Blackrock Financial Management, filed papers with the Securities and Exchange Board of India to initiate a mutual fund venture in the country.

Jio Financial Services debuted on the stock exchange on August 21, 2023. Since its listing, the stock has surged by over 21 percent.

What do the technical charts indicate?

In the weekly timeframe, the stock has broken through multiple resistance levels between ₹268 and ₹270. The surge in trading volumes indicates heightened participation.

According to Rajesh Palviya, SVP – Technical and Derivatives Research at Axis Securities, the weekly Bollinger band buy signal suggests increasing momentum. Moreover, the stock is trading comfortably above its 20, 50, and 100-day SMA, with these averages moving upward in line with the price increase.

He suggests investors to consider buying, holding, and accumulating this stock, anticipating a potential upside ranging between ₹330 and ₹365, with a downside support zone at ₹290–280 levels.

Fundamental Analysis

The surge in Jio Financial shares is fueled by various factors.

 Firstly, robust financial results and steady revenue growth have boosted investor confidence, spurring demand for the stock.

Secondly, the company’s ambitious expansion strategies, especially in digital financial services, have positioned it well in India’s burgeoning digital economy,” explained Sonam Srivastava, Founder and Fund Manager at Wright Research.

“Moreover, the support of Reliance Jio brings financial backing and access to a vast customer base, enhancing investor confidence even more.

She anticipates short-term fluctuations in Jio Financials’ stock price due to market dynamics and profit-taking, yet remains cautiously optimistic about its strong fundamentals and growth potential.

“In the long run, Jio Financials stands to benefit from the expanding digital financial services market in India, which could result in sustained growth and increased shareholder value,” Srivastava noted.

In the quarter ending December 2023, Jio Financial Services recorded a consolidated net profit of ₹293.82 crore, down 56% from ₹668.18 crore in the previous quarter (Q2FY24).

The company’s consolidated revenue from operations in Q3FY24 dropped 32% sequentially to ₹413.61 crore from ₹608.04 crore.

Jio Finance shares closed 10.54% higher at ₹335.00 each on the BSE on Friday.

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