DCF Studio

    JIOFIN.NS · NSI · Financial Services

    Jio Financial Services Limited

    Also onConsensus Drift

    Implied value per share

    INR 228.59

    Market price

    INR 229.89

    Implied upside

    -0.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedConsensus rests on as few as 1 analyst estimate(s).
    AdjustedCapital expenditure runs at 1.6% of revenue against depreciation of 1.1%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Current EV/EBITDA of 67.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    INR 228.59-0.6%
    Exit multiple
    INR 561.41+144.2%
    Market price
    INR 229.89

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn69bn138bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 47.8bnINR 71.7bnINR 107.5bnINR 161.3bnINR 241.9bn+50.0%
    EBITINR 53.1bnINR 79.6bnINR 119.4bnINR 179.2bnINR 268.7bn+50.0%
    NOPATINR 43.4bnINR 65.2bnINR 97.8bnINR 146.6bnINR 219.9bn+50.0%
    Add depreciation & amortisationINR 529.6mINR 794.5mINR 1.2bnINR 1.8bnINR 2.7bn+50.0%
    Less capital expenditureINR -774.1mINR -1.2bnINR -1.7bnINR -2.6bnINR -3.9bn+50.0%
    Less increase in working capitalINR -15.9bnINR -23.9bnINR -35.8bnINR -53.8bnINR -80.6bn+50.0%
    Free cashflow to firmINR 27.3bnINR 40.9bnINR 61.4bnINR 92.0bnINR 138.1bn+50.0%
    Discount factor0.94810.85220.76600.68850.6189-
    Present valueINR 25.9bnINR 34.9bnINR 47.0bnINR 63.4bnINR 85.5bn+34.8%
    Present Value Of The ForecastINR 256.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.658Reported 0.490, pulled toward 1.0 (Blume)
    Cost of equity12.07%Risk-free + beta x equity risk premium
    Cost of debt6.80%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationINR 1518.0bn87.5% of capital
    Total debtINR 217.7bn12.5% of capital, book value as a proxy
    Tax rate18.2%Effective, capped at statutory
    WACC11.25%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 228.59

    83% of EV

    Forecast FCFF, final year
    INR 138.1bn
    Capex at depreciation, working capital in reinvestment
    INR 220.8bn
    Less reinvestment at g/ROIC (22.2% of NOPAT)
    INR -49.1bn
    Capitalised
    INR 171.8bn
    ROIC (WACC floor)
    11.3%
    Terminal value, undiscounted
    INR 2011.8bn
    Terminal value, discounted
    INR 1245.1bn
    Enterprise value
    INR 1501.7bn
    Less net debt
    INR 49.4bn
    Equity value
    INR 1452.3bn

    Exit at 20.0x EBITDA

    Value per shareINR 561.41

    93% of EV

    Terminal value, undiscounted
    INR 5428.2bn
    Terminal value, discounted
    INR 3359.6bn
    Enterprise value
    INR 3616.2bn
    Less net debt
    INR 49.4bn
    Equity value
    INR 3566.7bn

    Spread between methods: 84%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.25%291.04292.30293.56294.83296.09
    10.25%255.58256.68257.77258.86259.95
    11.25%226.68227.63228.59229.55230.50
    12.25%202.71203.55204.40205.24206.08
    13.25%182.55183.30184.05184.80185.54

    Outlined: this model. Green text: above today's price of 229.89. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year50.0%50.2%+0.2pp
    Discount rate11.3%11.2%-0.0pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.