What to do with the stocks of IREDA and Jio Financial?

The stocks mentioned have had an amazing run and have provided their investors returns exceeding expectations.

Let me share the performance and insights for the share

Jio Financial Services

The stock has given more than 40% return in the past year.

Now the concerns about the stock are as follows

• Jio Financial has applied for a license to launch a Mutual Fund business with SEBI in Jan 2024 (Link). This will be done in partnership with Blackrock. The development is a bit confusing as Blackrock left a successful partnership in the Mutual Fund AMC business with DSP in 2018 (Link)
• With Jio Financial trying to enter the space of soundbox & UPI dominated by Paytm, PhonePe, BharatPe – It is not going to be an easy ride
• Considering the RBI curtailment on lending (especially personal), this is another segment that the business will find tricky
• It is commanding a PE > 100. This is crucial as the company was recently spun off from Reliance Industries

Considering this, It would be better if someone holding it could do a partial profit booking and move the money to larger established NBFCs which are more reasonable.

IREDA (Indian Renewable Energy Development Agency)

The stock has given more than 100% return in the past one year

Now the concerns about the stock are as follows

• Despite the stock being a dominant monopoly in the renewable energy space – it lacks sufficient numbers to back the valuation it is garnering
• The recent announcement for rooftop solar is a win-win for IREDA but fructification and implementation of the program are the key
• The stock has run up in a frenzy like other Railway, PSU banks, and Capex Companies linked to the Government of India

Considering this, it would be better to avoid the stock at the current levels or wait for a significant correction before entering it.

Hope this helps

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