Why did Jio Financial’s net profit falls 9% despite reporting 101% YoY increase in revenue growth?

Synopsis: Jio Financial’s Q3 FY26 revenue jumped 101% YoY to Rs 901 cr, but net profit fell 9% to Rs 269 cr as expenses surged over 333% YoY, led by Rs 212 cr finance costs.

The shares of this reliance-led NBFC company are in focus after reporting a 9 percent drop in net profit YoY, despite revenue more than doubling during the same period. In this article, we will dive more into the details of it.

With a market capitalisation of Rs 1,77,570 crore, the shares of Jio Financial Services Ltd are currently trading at Rs 278.90 per share, down nearly 3 percent from its previous day’s closing price of Rs 286.95 per share. In the last one year, the stock has delivered a poor return of 1 percent, underperforming NIFTY 50’s positive return of 11 percent.

Q3 Highlights

The revenue from operations for Jio Financial Services stands at Rs 901 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 438 crores, up by staggering 101 per cent YoY. However, on a QoQ basis, it reported a decline of 8 percent from Rs 981 crore. 

Coming down to its profitability, the company’s net profit stood at Rs 269 crore in Q3 FY26, down from Rs 295 crore in Q3 FY25, which is a decline of 9 percent YoY. Additionally, on a QoQ basis, it reported a net profit of Rs 695 crore, which is a significant decline of 61 percent.

Coming down to its expenses, the total expenses for Jio Financial Services stand at Rs 565.92 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 130.75 crores, up by staggering 333 per cent YoY. Additionally, on a QoQ basis, it reported a growth of 30 percent from Rs 436.50 crore. 

From our perspective, it might be crucial to point out that Jio Financial’s finance costs rose dramatically on a YoY basis in Q3 FY26, climbing to Rs 212 crore from no finance costs in Q3 FY25. This is a major leap, and it is quite evident that the company has transitioned from a relatively “light” financing structure last year to a stage where it is actively employing borrowed funds, which naturally results in interest costs being included in the P&L.

Simultaneously, the company has not publicly given a direct explanation of this particular spike in finance costs in any of the notes (the filing mainly discusses warrants, the Allianz JV, labour code impact, and the Jio Payments Bank acquisition). 

Therefore, the most realistic interpretation is that the increase is structural, resulting from the buildup of its lending/investing ecosystem through subsidiaries. Simply saying, when Jio Financial moves from merely being a financing company to actually doing more real financing activities, borrowings would go up, finance costs would go up, and this is likely to be an ongoing cost line in the future.

Subsidiary Highlights

Jio Credit Limited

Jio Credit delivered a standout quarter. Gross disbursements reached Rs 8,615 crore, nearly double last year’s number and 30 percent higher than the previous quarter. This momentum is also reflected in the earnings. 

Net Interest Income rose to Rs 165 crore, an increase of 166 percent YoY and 18 percent QoQ, driven by a larger loan book and lower funding costs. Operating metrics were strong, too. Pre-Provisioning Operating Profit rose to Rs 99 crore, up 130 percent YoY and 24 percent QoQ.

Jio Payments Bank

Jio Payments Bank posted one of its best growth performances this quarter. Total income grew 10 times over last year and doubled from the previous quarter, reaching Rs 61 crore. The main driver was a sharp spike in transaction volumes; management highlighted a threefold jump in transaction throughput just from the last quarter. 

Deposits are also rising rapidly. The bank’s deposit base stands at Rs 507 crore, up 94 percent YoY and 20 percent QoQ. Jio’s customer base keeps growing, with 3.20 million customers now onboard, a 69 percent increase from last year. The Business Correspondent network expanded even faster, 2,86,766 BCs this quarter, compared to just 7,263 in Q3FY25.

Jio Payment Solutions

Digital payments through Jio Payment Solutions continued their strong trajectory. They processed Rs 16,315 crore in transactions, which is 2.6 times more than last year and up 20 percent from the previous quarter. This growth directly boosted revenue: gross fee and commission income rose to Rs 96 crore, 4.6 times higher than last year and up 26 percent QoQ. Even as they expand, they’re maintaining profitability, holding a steady gross margin of 10 basis points.

Jio Insurance Broking

Jio Insurance Broking reported another solid quarter. They facilitated Rs 212 crore in insurance premiums, up 23 percent YoY. Their digital distribution strategy is working well; the PoSP channel premium grew nearly five times over the previous quarter, reflecting fast customer adoption of the digital-plus-partner model.

Jio BlackRock Joint Ventures

Jio BlackRock’s asset management business is gaining momentum, especially among retail investors. Currently, 51 percent of their investors are active SIP participants, making systematic investing a core strength. They’re also reaching beyond major cities: over 40 percent of retail AUM comes from B30 cities, and more than 18 percent of investors are new to mutual funds. Notably, the Active Equity Flexi Cap Fund AUM has risen 70 percent since the NFO. They’ve also introduced curated model portfolios to help investors align with their financial goals.

Overall, the Q3 FY26 numbers of Jio Financial reflect a company that is growing rapidly, but also one where the reality of increased costs is becoming apparent to investors. The profit drop occurred although revenue was doubled because the company is now facing real financing costs and higher operating expenses, which is normal for a lender shifting from “setup mode” to “execution mode”. 

The most important thing to watch in the future is whether the fast growth of the subsidiaries (credit, payments, and asset management) can result in stable margins and earnings growth, after the expansion costs have been settled.

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