In the financial services industry, Jio BlackRock, a 50:50 joint venture between Jio Financial Services and BlackRock Inc of the US, recently received regulatory approvals for its asset management company as well as stockbroking and advisory businesses. A spate of positive news has sent Jio Financial’s stock soaring almost 15% in barely a week.
So, could the Jio brand be on the verge of disrupting another industry?
Stock rally signals supernormal growth
Starting out as a subsidiary of Reliance Industries back in 1999, Jio Financial came into its own only in July 2023, following a demerger from its parent entity. Since then the company has grown by leaps and bounds.
From clocking revenue of just about ₹40 crore in FY23, Jio Financial went on to report ₹800 crore of revenue by FY25. Profits have kept up as well, growing from ₹31 crore in FY23 to ₹549 crore in FY25.
In recent months, however, the stock has rallied significantly in excess of the fundamentals. After remaining flat for one-and-a-half years since its listing in August 2023, the stock has appreciated by more than 55% in just four months. The sharp rally has taken the price-to-earnings (PE) ration from 82.1 times earnings in February 2024 to a whopping 127 times.
Is this hot air, or a signal for supernormal growth on the way?
Exponential growth in existing segments
Jio Financial currently operates in three segments – lending, payments, and insurance. These businesses have grown rapidly over the past couple of years. The leasing and lending business caters to home loans, and loans against property, mutual funds and shares. The assets under management (AUM) has grown from ₹173 crore as of March 2024 to more than ₹10,000 crore as of March 2025.
The payments bank, launched as a 70:30 joint venture with SBI in 2018, has also seen significant traction. With the full suite of payment services from UPI and bill payments, to CASA and debit cards, and even international UPI, its customer-base and CASA deposits have jumped three-fold in FY25. This fiscal year, SBI’s stake in the business has been acquired back.
During the fiscal year, the company also received the license to operate as an online payment aggregator. The insurance broking business is picking up as well. The company is working on building supply with 34 insurance partners and 61 direct-to-customer plans in life, health and vehicle insurance.
The result? The topline grew at a robust 26% during FY25, while the bottom line grew even faster at 44%.
Full suite of financial services
The company aims to expand into every facet of financial services. On top of already existing businesses of lending, insurance, and payments, Jio Financial has partnered with BlackRock to make waves in investments as well – fund management, advisory and stock broking.
Last week the regulator approved Jio BlackRock Broking. This entry into stock broking completes the full range of investment services planned under the company’s partnership with BlackRock. In June it received Sebi’s approval to operate as an investment advisor. The previous month the partnership’s AMC received the regulator’s approval to launch its mutual fund.
View Full Image
Together, these four businesses cover all core financial needs of customers, opening up ample opportunity for cross-selling and up-selling. While its payments solutions can ensure customer stickiness, lending, insurance, and investments can spur cross-growth.
Automation to support price disruption?
As India’s stock markets mature and it becomes harder for investors to beat the market, cost-efficient index-linked funds are expected to start dominating. Thematic index funds have already captured investors’ interest. The partnership with index-fund behemoth BlackRock, and the subsequent appointment of its ex-head of index-funds to lead Jio BlackRock AMC, indicates that the company is probably gunning to get in on the ground floor of this nascent shift.
The recently approved broking business has been set up as a wholly owned subsidiary of Jio BlackRock Investment Advisers. It is important to note that this business is headed by Marc Pilgrem, a veteran BlackRock manager specialising in Europe, Middle East, and Africa investments. His experience of less than two years at Jio BlackRock appears to be his first stint in Indian equities.
This indicates that even in supposedly customised advisory services, Jio BlackRock may take the low-cost route of robo-advisory. For the advisory business to be led by someone with hardly any experience in Indian equities, it must be heavily reliant on programmed, quantitative investment strategies.
BlackRock’s Aladdin could make the magic happen
This speculation finds further confirmation from the fact that BlackRock’s Aladdin platform is known for doing just that – developing data-powered systematic rules-based investment strategies that can fit any market across the globe. In fact, Aladdin generated $1.6 billion in revenue for BlackRock in 2024. Jio BlackRock may be taking a leaf out of its partner’s playbook.
Supported by the newly awarded stockbroking license to its subsidiary, assuming a disruptive business strategy prevails here as well, execution can be made cost-efficient as well. Further proof of disruption goals can be drawn from the fact that the new businesses are targeting the cost-conscious mass-market segment.
The company’s deep pockets, technological prowess, innovation and distribution could disrupt the entire financial services space. If this plays out as expected, active mutual funds, investment advisors and incumbent brokers will bear the brunt.
Bold bets beget big risks
Even if we leave out the risk that disruptively snuffing out competition may not be in the best interest of consumers over the long term, Jio Financial’s bold bets face big risks.
It will likely be a while before actively managed funds are no longer able to beat the market in India. So, the bet on passive, index-linked funds displacing active funds is a long-term shot, if not a long shot.
As for robo-advisory,pure quantitative investment strategies tend to not perform well in Indian stock markets. Some level of discretion or subjectivity is needed to at least weed out the investments which appear appealing on paper, but hide risks under the surface. With both the AMC and advisory businesses being spearheaded by leaders with limited exposure to Indian equities, the company will probably need to do some course-correction to make these ventures successful.
Broking arguably holds the most potential, which explains the 8% rally in the stock after the business received the required regulatory approvals last week. Discount brokerages already serve as successful proofs of concept. But how Jio Financial navigates the now-busy space of discount brokers in India remains to be seen.
For more such analysis, read Profit Pulse.
Ananya Roy is the founder ofCredibull Capital, a Sebi-registered investment adviser.
Disclosure: The author does not hold shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.
