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Steady execution across businesses! NBFC AUM up ~19% QoQ; consol. PBT (excl. dividend) grew 18% YoY

* Jio Financial Services (JIOFIN)’s 1QFY27 NII grew ~106% YoY to INR5.4b (37% beat). Other income grew 306% YoY to INR10.4b, which included dividend income of INR5.1b (which was typically received in 2Q of the previous fiscal years) and investment income of ~INR2.1b (PY: INR2b).

* Opex rose 270% YoY to INR5.7b (44% higher than est.). Within this, employee expenses rose ~139% YoY to INR1.5b. Consol PPOP (excl. dividend) grew 38% YoY to INR5.05b. Credit costs in 1QFY27 stood at INR246m (PQ: INR274m).

* Share of loss of JV & Associates stood at ~INR191m (vs. gain of ~INR315m in 1QFY26). There is now full consolidation of Reliance Services and Holdings (RSHL) as a 100% step-down subsidiary, w.e.f. 30th Apr’26, earlier accounted for under Share of Associates and JV.

* PBT (excl. dividend) grew 18% YoY to INR4.6b in 1QFY27. JIOFIN’s 1QFY27 consol. PAT (incl. dividend income) grew ~180% YoY to ~INR8.3b (PY: INR3b).

* Management shared that the company received the second tranche of INR59.3b from promoters under the preferential warrant issuance during the quarter, taking the cumulative capital infusion to INR98.9b. The remaining ~INR60b is expected to be infused over the coming quarters, further strengthening the company's capital base to support future growth.

Jio Credit: Strong disbursement traction; AUM up 19% QoQ

* Jio Credit AUM grew ~19% QoQ to ~INR307b as of Jun’26 (vs. ~INR257b in Mar’26). Disbursements grew ~173% YoY/6% QoQ to INR113b. NII stood at INR2.6b (up 119% YoY) with PAT of INR960m (up ~112% YoY and 35% QoQ).

* Jio Credit’s average CoB rose 7bp QoQ to 7.07% (PQ: 7%). Portfolio mix is balanced, with HL at 45%, LAS at 10%, and corporate lending and SME at 44%. ATS of INR13m in Mortgages, INR11m in LAS and average tenor of 3.25 years in Corporate/SME.

* CRAR stood at 22.35% with D/E ratio of 3.9x as of Jun’26 (Mar’26: 3x).

* Management shared that focus is on scaling the loan book responsibly while maintaining stringent credit underwriting standards to preserve best-in-class asset quality as the portfolio matures.

* We expect earnings momentum to strengthen every year, led by a disciplined scale-up of business and a focus on profitability. We expect AUM CAGR of 85% and PAT CAGR of 145% over FY26-FY28E, with RoA/RoE of 1.9%/10.4% in FY28E.

Valuation and view

* JIOFIN posted a healthy quarter, with Jio Credit scaling up well as its AUM crossed INR300b. Other businesses have seen steady progress, with improving profitability in payments business and continued traction in its insurance and AMC franchises. However, operating expenses remained high due to ongoing investments in incubating new businesses and scaling up existing operations.

* We cut our FY27/FY28 EPS estimates by 4%/6% to factor in high opex due to investments in ongoing businesses. JIOFIN trades at 1x FY27E P/BV. We model a consolidated PAT CAGR of 46% over FY26-FY28 and reiterate our BUY rating on the stock with a TP of INR315 (based on Mar’28E SoTP). Our SoTP does not factor in valuation from businesses like insurance manufacturing, wealth management, broking and marketplace, which are still in their incubation phase.

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