Jio Financial Services plans for Rs 36000 crore deal with Reliance Retail
Jio Leasing Services Limited (JLSL) – a wholly-owned subsidiary of JFS – plans to enter the device leasing business, and the equipment will be deployed in broadband wireless connectivity and other services.
“JLSL is entering into the business of operating lease via a Device-as-a-Service (DaaS) model. DaaS is a new-age service model where businesses or individuals lease certain goods along with associated services, rather than purchasing the devices outright,” according to a postal ballot notice to shareholders by JFS.
DaaS typically includes installation, maintenance, support, and sometimes additional services like updates.
Reliance Retail is a step-down subsidiary of Reliance Industries Ltd. RIL holds 83.56 per cent in Reliance Retail Ventures Ltd, which has a 100 per cent stake in Reliance Retail. Reliance Retail is in the business of dealing in devices and related equipment.
JLSL will purchase customer premises equipment/devices and telecom equipment from Reliance Retail Ltd (RRL), according to the postal ballot notice. JLSL will provide devices and telecom equipment on operating lease to the customers of Reliance Jio Infocomm Ltd. kuckad news.com
The above transactions will be at cost plus margin, and arrangements are proposed to be in the nature of continuing business transactions.
The company is seeking shareholders’ approval for transactions during two financial years – 2024-25 (FY25) and 2025-26 (FY26).
The monetary value of the transactions is estimated to be Rs 36,000 crore to be undertaken over FY25 and FY26.
The split of purchases across the two years would depend on the uptake of services and the pace of deployment of broadband wireless devices, according to the notice to shareholders.
The listed companies have to seek shareholders’ nod for related party transactions which in a financial year, exceed Rs 1,000 crore and 10 per cent of the annual consolidated turnover. The annual audited consolidated turnover of the company for FY23 was Rs 41.63 crore, and FY24 is Rs 1,853.88 crore.
RRL is in the business of dealing in customer premises equipment, enterprise devices, and other telecom devices. It is able to procure these goods at competitive prices due to large volumes, and RRL will be providing these devices to JLSL at cost plus an agreed margin, the notice said.
Jio FS operates broadly in four categories – lending and leasing, payments, protection, and investments. In the lending and leasing segment, it has started vendor financing and plans to enter home loans, loans against property, and loans against mutual funds.
In the leasing segment, under the DaaS model, it aims for a new-age service model for customer devices to target AirFiber, phones, laptops, solar panels, and EV batteries – among others, according to an investor presentation.
WHAT’S THE DEAL
Jio Financial unit Jio Leasing Services to buy telecom equipment and devices, including routers and cell phones
To rent out the equipment it buys to customers of Reliance Jio Infocomm
Jio Financial seeking shareholders’ approval for transactions to be undertaken over FY25 and FY26
To compete in the device-rental market with the likes of Hewlett Packard and Lenovo
KEY FINANCIALS
| KEY FINANCIAL RATIOS OF JIO FINANCIAL SERVICES (in Rs. Cr.) | MAR 24 | MAR 23 | MAR 22 | MAR 21 | MAR 20 | |
| PER SHARE RATIOS | ||||||
| Basic EPS (Rs.) | 0.60 | 60.46 | 325.13 | 238.10 | 1,138.21 | |
| Diluted EPS (Rs.) | 0.60 | 60.46 | 325.13 | 238.10 | 444.90 | |
| Cash EPS (Rs.) | 0.62 | 154.70 | 831.88 | 609.21 | 1,138.32 | |
| Book Value [ExclRevalReserve]/Share (Rs.) | 38.46 | 87,627.03 | 11,028.32 | 10,197.97 | 9,588.76 | |
| Book Value [InclRevalReserve]/Share (Rs.) | 38.46 | 87,627.03 | 11,028.32 | 10,197.97 | 9,588.76 | |
| Dividend / Share(Rs.) | 0.00 | 4,400.00 | 0.00 | 0.00 | 0.00 | |
| Revenue from Operations/Share (Rs.) | 1.00 | 206.09 | 735.69 | 1,461.29 | 1,728.96 | |
| PBDIT/Share (Rs.) | 0.86 | 244.26 | 875.59 | 1,131.83 | 1,592.03 | |
| PBIT/Share (Rs.) | 0.84 | 244.26 | 875.59 | 1,131.83 | 1,592.03 | |
| PBT/Share (Rs.) | 0.82 | 244.26 | 875.59 | 584.46 | 959.55 | |
| Net Profit/Share (Rs.) | 0.60 | 154.70 | 831.88 | 609.21 | 1,138.32 | |
| PROFITABILITY RATIOS | ||||||
| PBDIT Margin (%) | 85.19 | 118.52 | 119.01 | 77.45 | 92.08 | |
| PBIT Margin (%) | 83.26 | 118.52 | 119.01 | 77.45 | 92.08 | |
| PBT Margin (%) | 81.65 | 118.52 | 119.01 | 39.99 | 55.49 | |
| Net Profit Margin (%) | 59.94 | 75.06 | 113.07 | 41.68 | 65.83 | |
| Return on Networth / Equity (%) | 1.56 | 0.17 | 7.54 | 5.97 | 11.87 | |
| Return on Capital Employed (%) | 2.17 | 0.20 | 7.93 | 11.09 | 13.95 | |
| Return on Assets (%) | 1.56 | 0.12 | 7.54 | 5.97 | 4.80 | |
| Total Debt/Equity (X) | 0.00 | 0.04 | 0.00 | 0.00 | 1.25 | |
| Asset Turnover Ratio (%) | 0.03 | 0.00 | 0.07 | 0.09 | 0.08 | |
| LIQUIDITY RATIOS | ||||||
| Current Ratio (X) | 6,837.09 | 33.29 | 31,177.43 | 11,817.35 | 1.93 | |
| Quick Ratio (X) | 6,837.09 | 33.29 | 31,177.43 | 11,817.35 | 1.93 | |
| Inventory Turnover Ratio (X) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Dividend Payout Ratio (NP) (%) | 0.00 | 2,844.54 | 0.00 | 0.00 | 0.00 | |
| Dividend Payout Ratio (CP) (%) | 0.00 | 2,844.54 | 0.00 | 0.00 | 0.00 | |
| Earnings Retention Ratio (%) | 0.00 | -2,744.54 | 0.00 | 0.00 | 0.00 | |
| Cash Earnings Retention Ratio (%) | 0.00 | -2,744.54 | 0.00 | 0.00 | 0.00 | |
| VALUATION RATIOS | ||||||
| Enterprise Value (Cr.) | 220,188.85 | 0.00 | 0.00 | 0.00 | 0.00 | |
| EV/Net Operating Revenue (X) | 345.09 | 0.00 | 0.00 | 0.00 | 0.00 | |
| EV/EBITDA (X) | 405.07 | 0.00 | 0.00 | 0.00 | 0.00 | |
| MarketCap/Net Operating Revenue (X) | 352.29 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Retention Ratios (%) | 0.00 | -2,744.54 | 0.00 | 0.00 | 0.00 | |
| Price/BV (X) | 9.20 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Price/Net Operating Revenue | 352.39 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Earnings Yield | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Source : Dion Global Solutions Limited
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