DECODING Jio Financial Stock’s Rally, Business Model, P&L and Future prospects MUST WATCH Video | #Finance

hi friends 6 months back I invested in Geo Financial Services Limited at an average price of 215 rupees per share I had bought 1382 Shares at that time and I still hold them at the time of recording this CashNews.co the stock is trading at around 380 rupees level 6 months

back I had created a full CashNews.co on my channel giving you a lot of detail about Geo Financial Services Limited and more than 4 lakh people have already watched that CashNews.co but since then a lot of changes has happened into geof financial services so in this CashNews.co I want to decode

four hyper critical points about Geo Financial Services Point number one is why the stock has been rallying what is driving this rally in the stock Point number two is there have been significant changes in the business model of Geo Financial Services Limited I want you to understand those changes

Point number three is we’ll try and go through the pnl account of Geo financial services so that you can understand and track this stock in the upcoming quarters and point number four most interesting and most critical part also is the Valuation of Geo Financial Services

we’ll try to Value Geo Financial Services in this CashNews.co if you’re new to my Channel watch this CashNews.co and consider subscribing to my Channel with that let’s get this CashNews.co started first question is the rally in this stock that we have seen in the last 6 months for

me there are two key reasons for this rally reason number one is the speculation and the rumors and reason number two is the foundational layer for the business that Gio is building right now is driving the prices up let me give you examples for both have a look at my screen and you will see very

recently Geo Financial stock searched by by close to 15% why because of the rumor that Geo Finance is in talks with PTM Bank to acquire PTM bank because PTM bank is bleeding right now because

of the regulatory pressures later on Gio and PM both clarified that they are not in talks but by the time stock has already gone up by 15% the next day although it came down slightly but the point is that these speculations or rumors were driving the stock up but more importantly the second point

is around they laying the foundational air for the business for example have a look at my screen and you will see recently Geo Financial surge 5% after they signed a joint venture deal with black rock I will speak about more details about this very very important point that we need to understand

during the business model discussion this is another example where they’re actually building the foundational layer another example you will see on my screen is that they are planning to bring standard charted executive as the CEO for their nbfc business when news like these come they are

going to have positive impact on the share prices also these are important bits because they are now laying down the foundation of their business last example I’ll give you recently the stock prices surged by 7% why because it was in the news that Geo

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance is coming up with a soundbox very similar to what we have for PM bank and again the prices surge by 7% these are all various foundational layers that Gio is trying to put in place and that is driving the stock prices up

it’s right now not the Profitability not the growth here it’s the foundational layer that is driving the growth I hope these points are very clear to you let’s now move to the changes in their business model which are absolutely important for us to understand what

you see on my screen is the business model of Geo Financial Services Allow Me 2 to 3 minutes of time and you will understand a great deal about this business model what you see in The Orange Box here is the two additional businesses that they have added in the last 6 months number one is Geo

leasing services and number two is two joint ventures with black rock they already had announced one joint venture with black rock 6 months back but very recently they have added two additional joint ventures with black rock let me clarify that let me first speak about the Geo leing business what

is this leing business simply it means device as a service model that Gio is trying to build in India it’s a very very unique model in India not many companies are doing that I’ve been working in UK for a Credit lending company that was almost following this model which

is rent to higher which is giving sofas fridges TVs on rent rather than selling it now if you look at Gio is doing something very similar here phones laptops solar panels EV batteries it equipments is what they’re going to give on lease who is going to be the customer for this leasing

business it is mainly going to be the corporates as they’ve clarified in this particular announcement here the natural question you may have Rahul why is that corporates are going to take these products on lease simply because of working Capital they don’t need to

invest a lot of money in having these Assets bought by themselves rather they will take it on lease from Geo financial services but the million doll question is why is Geo moving into this business it’s very very simple very recently RBI started tightening the strings for the

unsecured lending and that is the reason that Gio is tweaking their plans as you can see here that they’re moving into secured lending secured lending is when they have something as a collateral for their lending which is the case in the leing business because the device is there if a

corporate customer is not able to make the payments they will very well take the devices back with them is this a good move is this a bad move in my view this is a fantastic move because this model is very new to Indian market and in my view that has a potential to grow in Indian market coming back

to the second Business Edition which is joint venture with black rock so if you remember 6 months back they announced that they’re going to have a joint venture with black rock for the AMC business for the mutual fund business but now they’re adding two more business units one is the

Wealth Management for hnis and number two is the broking business which is zeroda Angel all these people are in broking business so these two business lines is what Geo none;">Finances also adding now when it comes to the Wealth Management opportunities are huge because as per Jeffrey’s report around 1 to1 trillion us is what hni high Net Worth individuals in India hold just to put this in perspective

India’s GDP is around3 trillion us so just consider the scale of1 1 to1 1.2 trillion of Wealth Management that is going on in India by the wealth managers and this is where Gio is trying to take an entry into again I think it’s a very very good move in my view rul what

about other business units that we see here I have covered them in my previous CashNews.co but allow me 30 seconds of commentary and I’ll explain to you in a very very simple language first is Geo Financial Services Limited itself they have applied for geo Financial Services to become a core

Investment Company very soon they will get authorization what does this simply mean is that geof Financial Services Limited as such is not going to have its own business it is only going to act as a holding company the second entity is Geo Financial limited which is going to be the nbfc which is

going to be the lending unit you can consider this as a baj Finance limited similar to baj #1a73e8; text-decoration: none;">Finance limited then leing Services we’ve spoken about Insurance broking limited similar to policy Bazar they are going to act as a Insurance aggregator then comes Payment Solutions limited examples such as

soundbox by PTM for example some web apis for website payments also goo payments Bank you can consider this as a PTM business then comes Reliance Industrial investment holding limited this is the connection between Geo financial services and Reliance

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Industries because remember Geo Financial Services holds 6% stake in Reliance Industries that is through this holding

company so it does not have its own business but through this holding company Gio has 6% stake in Reliance Industries that is very very important from a Valuation

perspective we’ll speak about that towards the later part of the CashNews.co then comes the joint venture with black rock where we are going to see three businesses number one is AMC business number two is Wealth Management business and number three is the broking business so

if I were to summarize this Geo Finance is going to have seven Financial businesses within one Gio financial services number one is landing number two is leasing number three is

Insurance number four is payment number five is AMC number six is broking and number seven Is Wealth Management so far if you’re liking this CashNews.co humble request to hit the like button let me know in the comments a simple thank you it will motivate me a

lot to come up with such content for you at zero cost also you can consider subscribing to my YouTube member Community because I post in-depth analysis of stocks and mutual funds that will benefit you a lot with that let’s move to the p&l account of Geo

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance services that they have recently announced so what you see on my screen is the pnl account and Profit after tax in 2023 was only 31 CR rupees it has now gone up to 165

rupees so that is a massive jump but let’s put this in some context in terms of where is this money coming from so first component that you will see here is the interest Income interest Income has gone up from 38 cror in 23 to now 938 cror this is a massive

jump this is not the interest Income that is coming from their Landing business or leing business what is it let me show you so if you come down and read their commentary you will see that this interest Income is coming from the fixed deposits the company hold in

their wholly owned subsidiaries which is 938 CR so this is the money that the company holds as a FD and this is where the interest is coming from this is not from Landing business or leing business so just be clear that right now the interest Income is not from The Landing business

the second Income we will see here is the dividend Income dividend Income is close to 217 crores where is this coming from this is coming mainly from the 6% stake that Gio has in Reliance bold; color: #1a73e8; text-decoration: none;">Industries so whenever Reliance Industries announces dividend Gio #1a73e8; text-decoration: none;">Finance gets some money into their Consolidated pnl account and that’s where we see this dividend Income coming to 2117 crores the third component is fees and commissions Income which is 152 crores what is this fees and

commission Income again if we read the commentary we see that it is coming from their Insurance business and payment aggregator business so these two businesses have started generating some money for the company which is Insurance business and

payment aggregator business the fourth component is net gain on Fair Value changes it is again gone up from 3 cres to 547 crores and again this is some realized and unrealized gains that the company has on certain Money Market instruments again this is not the business operations

that the company is generating money from these are simply Money Market instruments the company got during the demerger from the Reliance Industries so the total

Income is 1,855 crores then you reduce expenses such as staff expenses operating expenses comes to the pre-provisioning operating Profit then you take the provisions out some of the associates and joint ventures have got some contribution as well in this

Consolidated pnl which is 428 crores all in all this is how 1600 crores is made up of right now you can see the only one component that is coming out of the operating activities of the company is the fees and commission Income which is coming from the Insurance

business as well as payment aggregator business that is 547 crores all the remaining money is mainly from the Income that the company is generating on the money that they have on their Balance Sheet let’s now move to the Valuation of Geo

financial services so because of this Profit that the company has generated first point is that the PE of this Geo Financial Services has come down from 7,000 8,000 level to 149 because now they have got, 1600 cres worth Profit generated in 2024 I hope the first

point is very very clear to you however PE right now doesn’t make much sense to me because as I said the company is not generating this money out of their operating activities so how do we look at the Valuation of Geo Financial Services couple of points that I want to make

Point number one is as we know that Geo Financial Services hold 6% stake in Reliance Industries Reliance is trading at around 3,000 level here right now 2900 level so 180 rupees comes out

to be the price from that perspective however that’s not the only thing that Geo Financial Services have if you look at the Balance Sheet of geof financial services you will see that the total Assets it has right now is 1ak 144,000 crores so we really need to

see the book value of Geo financial services and right now the book value of Geo Financial Services seems to be around 220 rupees per share but of course the share will not be available in the Market at the book value it’ll be otherwise the PB multiple of only one therefore if you look at the

comparison from for example likes of Bajaj Finance that has got a PB multiple of 5.56 But please understand Bajaj bold; color: #1a73e8; text-decoration: none;">Finance is a business that has matured it is already generating lot of money through the operating activities so you can’t really put five times of PB value to geof financial services because right now the business is not generating any

operative Income as far as we can see in the pnl account but at the same time if you compare it with let’s say AMC businesses so HDFC AMC business there it is running at a PB multiple of 11 this is where I say Geo financials Valuation is extremely hard to do

because a there are seven to eight businesses right now included in that which one do you compare with Challenge number two is that none of the businesses have started giving any operating Income so how do you even evaluate it how do you even value it so you can’t really but

if you look at the current market price of geof financial services stock it is trading at around 380 rupees level that is around 1.73 PB multiple so in my view that is slightly on the higher side in my personal view I think around 1.5 times of the book value which is 1.5 times of 220 rupees might

be a fair value right now which comes out to be around 33 340 rupees right now the stock is trading at around 380 level so I am not planning to buy at 380 level in my view it comes down to let’s say 330 340 I might go for averaging my stock prices again not a recommendation for anybody to

consider buying at 343 50 level I have just given you few examples of how I am thinking about the pricing for geo Financial Services right now so please humble request do not take this as a recommendation because stock may go up from here it might never come down to 340 level or it might crash down

to 300 level nobody can predict it with that I hope you enjoyed this CashNews.co if you did hit the like button let me know in the comments a simple thank you I will also recommend you to watch these CashNews.cos now so that you can learn a lot about investing with that I’ll see you in my

next CashNews.co Until then keep rocking