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Mukesh Ambani’s Jio Financial Begins On A $20 Billion Wicket

A business plan for Jio Financial Services Ltd is expected to be revealed in an upcoming annual general meeting for Reliance Industries

By Govindraj Ethiraj
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Mukesh Ambani’s Jio Financial Begins On A $20 Billion Wicket

On today’s episode, financial journalist Govindraj Ethiraj talks to Deven Choksey, MD and Chairman of DRChoksey FinServ as well as climate scientist Dr Arunabha Ghosh, CEO of the Council for Energy, Environment and Water (CEEW).

  • <01:04> Markets Are Going Stronger, Jio Financial Hits It Out with Deven Choksey
  • <12:00> Infosys net profits up and attrition down sharply to 17% reflecting shifts in the tech job market.
  • <13:51> Massive renewable energy projects announced, including by Adani, how many will materialise with Dr Arunabha Ghosh
  • <21:55> Who Was India’s Best FM in the early years?
  • <25:39> And Hmm..Netflix finally cracks down on password sharing in India


NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

Good morning, it’s Friday the 21st of July and I’m Govindraj Ethiraj coming to you from Mumbai, India’s financial capital and most rainy city. Also, we are on our 50th episode so thank you all for your encouragement!

Our Top Reports For Today

  • Markets Are Going Stronger, Jio Financial Hits It Out
  • Infosys net profits up and attrition down sharply to 17% reflecting shifts in the tech job market.
  • Massive renewable energy projects announced, including by Adani, how many will materialise
  • Who Was India’s Best FM in the early years?
  • And Hmm..Netflix finally cracks down on password sharing in India

JFSL Starts At A Value Of $20 Billion

Jio Financial Services (JFSL), a Mukesh Ambani company that was spun off yesterday from parent Reliance Industries commanded a market capitalisation of nearly $20 billion when it was priced around Rs 261 per share in a complex process involving a special trading session on the exchanges created to discover it’s value.

And the market put the value at, for a business that barely exists, at $20 billion. This in a very broad sense would put more tech startups to shame.

The actual listing of the stock will take a month or so. And shareholders of Reliance Industries got one share of JFSL for every share of Reliance Industries they held.

The market is paying in a general sense for the same execution capability that it always rewards Reliance group companies with.

Also, perhaps the inevitable big brother literally and figuratively arrived in the modern finance space.

Yesterday, I spoke of how Bajaj Finserv was spun off Bajaj Auto by late founder Rahul Bajaj and also thus ensuring a smooth transition to the next generation with Rajiv Bajaj taking over the two-wheeler arm and Sanjeev Bajaj taking over the finance businesses.

The Mukesh Ambani - Anil Ambani split did not go that well and turned instead into a bitter fight after founder Dhirubhai Ambani died without leaving a will.

The market perception at least in Mumbai was that while Anil may or may not succeed with businesses like power and telecom which he inherited as his part of the settlement, he would make a success of Reliance Capital.

That did not happen either and Reliance Capital with substantive assets and joint ventures for life and general insurance has gone into bankruptcy.

And now Mukesh has $20 billion of currency in stock and value assuming it stays there to take some big bets.
Jio Financial by the way should land below Bajaj Finserv which is around $57 billion market capitalization or Rs 460,000 crore.

But it will be ahead of others like Cholamandalam Finance and many others. Fintech companies and payment platforms are mostly not in this reckoning.

JFSL has a former ICICI Bank hand Hitesh Sethia as CEO and also former ICICI Bank Chairman K V Kamath in the mix.

A precise business plan for JFSL is expected to be revealed in an upcoming annual general meeting for Reliance Industries, usually the time when Reliance lays out its ambitious plans and sets targets. Presumably, that is as much for everyone within the company as for everyone outside.

The expectation is of course that, unlike the Reliance Capital days, Jio now rides on a substantial retail footprint.

Reliance Retail has 18,040 retail stores and a 249 million registered customer base while Jio's subscriber base is around 430 million customers.

I am a little sceptical of automatic transitions between consumers of this kind, let's say mobile phone or retail store to some banking and financial product.

Remember, the banks themselves, including HDFC Bank now a much larger entity with HDFC folded in, is also on the prowl.

Logic says India’s addressable market for cross-selling and resultant profits is big but not huge.

And what is big is being chased by everyone including pesky phone callers usually from Bajaj Finserv, though its head Sanjeev Bajaj recently promised they would cease and desist such direct approaches.

This brings me to the point that companies like Bajaj Auto use the same logic to approach the customer, buy a two-wheeler and get finance on the go.

So some cross-selling opportunities are already captured in a manner of speaking.

In which case Reliance is betting on new business and sheer growth and thus beyond the existing market which is very likely.

The good thing about Reliance is it usually lays out all its cards on the table and is not very cloak and dagger about things, mostly because it believes it will overwhelm with scale. So we will know and see soon.

I was lucky to catch market veteran and perhaps the best Reliance watcher I have met, Deven Choksey of DR Choksey Finserve to get a sense of why the market is so bullish on JFSL.

I began by asking him why he was so bullish on a company which had no real revenue at this point.


Meanwhile, against some expectations though with much hope, India’s Sensex once again touched a new peak yesterday of 67,616 before closing 474 points up at 67,572.

As you can imagine 70,000 is now in sight.

The Nifty50 inched closer to the 20,000 mark, a development that brought much cheer and delight to all Nifty watchers of which there are quite a few.

The 50-stock index hit another high of 19,992 in intra-day trade before closing 146 points at 19,979.

A quick reference point here. ITC, the cigarettes to consumer products and hotels stock has now become the 7th company in the country to see its market value or capitalisation cross Rs 6 trillion or Rs 600,000 crore.,

This is also obviously to remind all those ITC stock naysayers what they missed and more importantly when.
Results season continues as many more pour in.

IT major Infosys on Thursday reported a roughly 11 per cent rise in net profit in the quarter that ended on June 30 to Rs 5,945 crore as compared to Rs 5,360 crore in the same quarter last year.

Infosys had a good run in the last quarter with some unusually large deals driving growth.

Revenue grew 10%-on-year (YoY) to Rs 37,933 crore.

Significantly, attrition levels have declined to around 17% after hovering around 28% around this time last year and steadily declining since then.

Whether the falling attrition levels reflect some general industry stabilisation is not clear to me right now though it does suggest that job opportunities are not as easy to come by as they were in the Covid era frenzy for talent. Infosys employs around 336,000 people now, down slightly from earlier.

Big Green Energy Project 

We saw some big green energy announcements this week, notably by the Adani Group which set a 45 GW target of renewable capacity by 2030 or in 7 years' time.

Half of this is likely to come from a 20 GW project spread over 72,000 acres in the deserts of Gujarat. The Adanis already claim an operational green energy capacity of 8 GW.

Adani’s promise must be seen in the context of India’s larger renewable energy targets, much of which will be private sector or private capital driven.

And savings and shifts must happen up and down the line since it’s also about fuels used for the generation of energy as much as what it is used for. For example, the electrification of cars takes out fossil fuel more effectively if the electricity is also generated through renewable methods and not burning more fossil fuel.

A paper titled Can India Become a Green SuperPower by climate scientist Dr Arunabha Ghosh, also CEO of the Council for Energy, Environment and Water or CEEW and Vice-Chair of the UN Committee for Development Policy says in a Foreign Affairs paper that coal accounts for a whopping 57% of the country’s primary energy consumption; oil accounts for 27%, and natural gas accounts for over six percent. Non-Fossil fuel sources such as solar, hydropower, and nuclear energy—make up just 10%.

To achieve net zero, India must therefore dramatically reconfigure its energy sources. In the future, much of the country’s economy will have to be powered by clean electricity.

Other parts will have to be powered by clean fuel. For instance, under certain scenarios, India’s industrial and trucking sectors will need to get at least 80% of their energy from green electricity by 2070, and the remainder will have to come from other clean energy sources, such as green hydrogen or sustainable biofuels.

Hitting this figure, he argues, will require extraordinary feats of development to upgrade the country’s infrastructure. As part of the net-zero transition, for example, India wants to deploy 500,000 megawatts worth of clean electricity infrastructure by 2030. (A megawatt of solar energy can power 350 to 400 homes a year.) Right now, its renewable energy capacity is 125,692 megawatts.

So where do we stand on this target, mission and objective and how geared are we to achieve it?
I reached out to Dr Ghosh and began by asking him to take us through where we were on our journey.

Who Was India’s Best Finance Minister In The Early Years?

Shaping India’s economic policies in its early years was no mean feat. As we look back, we can see what was the thinking that shaped many of our laws and approaches to laws, whether the socialistic model or the many institutions that govern India’s financial systems.

Independent India has so far witnessed twenty-eight finance ministers. But only a handful of them could leave their mark on the exchequer or North Block, the headquarters of the Indian finance ministry. I had the opportunity to speak to Ashok K Bhattacharya, well-known financial journalist, editor and author of From Independence to Emergency: India’s Finance Ministers 1947-1977 is the story of India’s unforgettable finance ministers who shaped India’s economy in the first thirty years after Independence.

In a much longer conversation which will play out over the weekend in The Core Report Weekend Edition, I asked him about the independence of finance ministers and the role of prime ministers in economic policy and decision-making.

And Hmm...  Netflix Cracks Down In India Too

And it’s finally happened. Netflix, the streaming giant, has unveiled its policy to combat password sharing in India.

The company which has over 230 million subscribers worldwide said that it will be sending mail to members sharing Netflix outside their household in India that they essentially cannot.

This was expected of course but there was a counter view that India would get slightly different treatment being the emerging market with great opportunities.

Quite likely, the best way to capitalise on this opportunity is to make people pay for their entertainment. India of course has been a notoriously penny-pinching market for media and entertainment consumption - ask me as a journalist, I can testify to how advertisers pay mostly for the content and the privilege to push their advertising to consumers. Which in turn often distorts the content model.

This has of course changed in recent years as people do pay up for much more media and entertainment content than they ever did.

But obviously not as much as streamers like Netflix would like us to.

That’s it from me, have a great weekend ahead and look forward to connecting with you over the weekend on our special Core Report Weekend Edition with journalist and author AK Bhattacharya.