| Jio Leasing Services Limited | ||||
| 'CRISIL AAA/Stable' assigned to Bank Debt and Non Convertible Debentures; 'CRISIL A1+' assigned to Commercial Paper | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL AAA/Stable’ rating to the non-convertible debentures and long term bank loan facilities of Jio Leasing Services Limited (JLSL). CRISIL ratings has also assigned ‘CRISIL A1+’ rating on commercial paper of JLSL.
JLSL is a wholly owned subsidiary of Jio Financial Services Ltd (JFS) - JFS is a holding company and its subsidiaries/ JVs undertake various financial services businesses (together referred to as JFS group). In fiscal 2024, JFS was demerged from Reliance Industries Ltd (RIL; rated ‘CRISIL AAA/Stable/CRISIL A1+’) and listed as a separate entity.
Mr. Mukesh D. Ambani is the promoter of JFS. The Promoter Group holds 47.12% in JFS as on March 31, 2024, and it is not expected to significantly reduce its holding from current levels.
The ratings on the debt instruments of JLSL factor in expectation of strong support from the parent, JFS. The JFS group has a healthy capital structure, robust liquidity including its holding of 6.1% of RIL shares, and an experienced management team. JFS group’s credit profile is further driven by the demonstrated track record of the promoter group in building businesses across various sectors. These strengths are partially offset by nascent stage of operations in the financial services business.
As on March 31, 2024, JFS’s subsidiary Reliance Industrial Investments and Holdings Ltd, held 6.1% stake in RIL and JFS group derives financial flexibility from the holding which was worth around Rs 1.23 lakh crore.
JFS’s subsidiaries and JV will be involved in businesses such as retail and merchant lending (through JFL), operating leases (through JLSL), payments bank operations, payments aggregator and insurance broking. JFS has also entered into a joint venture with BlackRock Inc to foray into the asset management business and has sought in-principle approval for the sponsors from SEBI in relation to the same. Subsequently, they have expanded the partnership with BlackRock to include wealth management and broking businesses as well.
On a consolidated basis, JFS had a sizeable networth of Rs 1,39,148 crore as on March 31, 2024 which includes the mark-to-market valuation of the 6.1% stake held in RIL. Liquidity was strong with liquid assets of about Rs 22,000 crore as on the same date. |
Analytical Approach CRISIL Ratings has analysed the standalone credit risk profile of JLSL and then factored in support from JFS both on an ongoing basis and in the event of distress. The capitalisation profile of JLSL is expected to eventually benefit from robust liquidity of the JFS group and the 6.1% stake in RIL as investments held by JFS’s wholly owned subsidiary Reliance Industrial Investments and Holdings (RIIHL). Hence, CRISIL Ratings has taken a consolidated approach of JFS and its subsidiaries/associates. Further, the ratings factor in the strategic importance of the JFS group to, and the demonstrated track record of, the promoter group in building businesses. |
Key Rating Drivers & Detailed Description Strengths:
JLSL is a wholly owned subsidiary of JFS and is expected to be a critical part of the larger Jio ecosystem. The entity is expected to receive capital along with strong operational and financial support from JFS, to achieve its growth targets.
JFS marks the foray of the promoter group into the financial services business and will be a critical part of the promoter group’s overall strategy. The promoter group has an extensive track record in building successful and leading operations in sectors such as petrochemicals, retail and telecom.
The promoter group has demonstrated its ability to incubate and scale up multiple consumer-oriented businesses, including Reliance Retail Ventures Ltd (RRVL, rated ‘CRISIL AAA/Stable/CRISIL A1+’) and Reliance Jio Infocomm Ltd (RJIL, rated ‘CRISIL AAA/Stable/CRISIL A1+’).
The promoter group has long-term commitment towards the JFS group. It has increased its stake in JFS post listing to the current level of 47.12% from 45.8%. The promoter group has also publicly articulated that, like Jio and Retail, JFS too will prove to be an invaluable addition to the Reliance ecosystem of customer-facing businesses.
Further, usage of the “Jio” brand, is a positive given the wide recognition among retail customers, merchants and small businesses. The brand recall and direct-to-customer approach leveraging the ecosystem could enable the JFS group to acquire customers at a lower acquisition cost and enable faster product scale up, allowing strong brand recognition in a competitive market.
JLSL will run operating lease business via Device-as-a-Service (DaaS) model. JLSL will purchase the customer premises telecom equipment/ devices such as AirFiber and provide the same on operating lease to the customers. The company has recently received shareholder approval for related party transactions.
JLSL also plans to add other devices such as laptops, phones, solar panels, EV batteries, IT equipment, ship lease etc. to their product portfolio.
CRISIL Ratings expects that all these aspects, combined with robust financial strength of the JFS group, will help JLSL derive benefits to successfully scale up its businesses over the medium term.
Being part of JFS group, JLSL will benefit from robust capitalization and liquidity of the group. The process of capitalizing the company for the planned growth is underway; as on March 31, 2024, the networth of JLSL stood at Rs 39 crore.
On a consolidated basis, JFS reported networth of Rs 1,39,148 crore as on March 31, 2024, which includes the market valuation of the 6.1% stake held in RIL. The JFS group’s strong lineage is expected to provide significant benefit in terms of access to capital markets for expanding funding sources and implementing a well-diversified funding plan.
As on March 31, 2024, group liquidity was strong with liquid assets of about Rs 22,000 crore. Along with this, it had 6.1% stake in RIL, which is completely unencumbered (worth Rs 1.23 lakh crores as on March 31, 2024).
JFS has an experienced management team to run operations and build scale, especially in retail financing. The management's ability to scale up the business and tap into opportunities within the group’s ecosystem is further strengthened by an experienced board of directors.
The management has recently launched a beta version of the Unified App to address the diverse financial needs of customers and actively engage with them throughout their life journey. This will also allow the company to harness the potential synergies within the JFS group arising from the multiplicity of touch points and diversified product offerings. The management has put in place adequate systems, processes and policies to scale up the business.
Weakness:
JLSL has commenced its operations in the first quarter of 2025. However, the ability to successfully build the business with healthy asset quality and profitability will remain a key monitorable.
Other than leasing, JFS, through its other subsidiaries, will be involved in financial services businesses such as retail lending, merchant lending, payments bank operations, payments solutions and insurance broking.
It is expected that JFS will benefit from harnessing group synergies and build on its brand franchise across its different businesses as it ramps up its financial services verticals. |
Liquidity: Superior As on March 31, 2024, JFS at a consolidated level had liquid assets worth about Rs 22,000 crore, including cash and cash equivalents at Rs. 16,039 crores. The group has nil borrowings as on the same date. |
Outlook: Stable The company will continue to benefit from the strong financial, operational, and managerial support of JFS. |
Rating Sensitivity factors Downward factors: ● Any significant decline in shareholding in JFS by the promoter group ● Any significant decline in shareholding or the strategic importance of JLSL to JFS ● Inability to achieve steady-state profitability over a sustained period |
About the Company JLSL is a public limited company incorporated on November 09, 2020. The company is entering into the business of operating lease via device-as-a-service (DaaS). It would typically include installation, maintenance, support and certain additional services like updates. |
About the Group JFS was incorporated as Reliance Strategic Investments Pvt Ltd on July 22, 1999. The company was renamed as Reliance Strategic Investments Ltd on January 14, 2002. It subsequently became Jio Financial Services Ltd on July 25, 2023, following which, a new certificate of incorporation was issued. JFS submitted an application to the Reserve Bank of India (RBI) for conversion to a core investment company (CIC) from an NBFC and received a certificate of registration dated July 9, 2024. JFS’s subsidiaries, will be involved in the business of retail lending, merchant lending, payments bank operations, payments solutions and insurance broking. |
Key Financial Indicators: JFS (consolidated)
*Note – The figures of previous fiscals are not comparable as the demerger of financial services business consummated in fiscal 2024. Appointed date of the demerger was March 31, 2023
Key financial indicators: JLSL (standalone)
*Note – The company is yet to commence operations and hence the key financial indicators are not meaningful |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
* interchangeable with short-term bank loan facility ^Yet to be issued |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||
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Criteria Details
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