Business
Jio Financial will emerge as a disruptive force but scale buildup will take time, says report

New Delhi, Sep 19
Jio Financial Services will emerge as a disruptive force in the financial space, but the scale buildup will take time, Elara Capital said in a research.
Jio Financial is a financial powerhouse in the making, operating fintech & new-age biz. Jio Financial will transform into a NBFC-CIC. And, this will be a holding company that operates the financial services business via its consumer-facing subsidiaries.
“We see it operating like a fintech & new-age, success factors, such as creating a flywheel effect: it will work on the principle of acquisition, engagement, & monetisation. Huge data and wide distribution bolster this potential,” the report said.
The success of a go-to-market business model is contingent on the flywheel effect. And, Jio Financial can leverage on the Group strength: more than 18,000 retail stores, over 50mn registered users, and 400mn plus customers of its telecom business. Add to this, a robust capital base, strong promoter (feeding into the credit rating), nimble tech architecture and a visionary leader with an experienced team (formation underway) provides Jio Financial a good Launchpad, the report said.
While Jio Financial has the ingredients to be a potent disruptor, in our view, the modus operandi of “money in” vs “money out” business is different. The lending (leverage) business has its own learning curve, and the firm will be no different; thus, it will be tough to replicate the Jio moment. While Jio Financial will be a Digital First institution, laying risk management base and establishing a collection framework will take precedence.
“Organically, assuming the level of penetration, we see Jio Financial to be a disrupting force, but not to extent the markets project,” the report said.
“We believe Jio Financial’s value creation journey will be determined more by its new partnerships than pure business outcome, and valuation will be front-ended. Based on the current business model, working with a holdco discount and BV multiple looks inconclusive and this will evolve, and, in this context, capital allocation becomes key,” the report said.

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