Shares of Jio Financial Services (JFS), demerged from Reliance Industries last month, are set to be listed on stock exchanges on Monday, August 21. During a price discovery session on July 20, JFS shares were valued at Rs 261.85 each, giving the company a valuation of Rs 1.66 trillion ($20 billion).
Some experts anticipate that the stock could rise to surpass the Rs 300-mark.
“The stock could list at around Rs 300. If one excludes the treasury stock that the company owns, Jio Financial’s value as a percentage of its net worth is far lower than what non-banking financial company (NBFC) peers command,” observed G Chokkalingam, founder and head of research at Equinomics.
Between the price discovery session and Monday’s listing, JFS has undergone key developments, including the launch of asset management ventures and reported plans for an insurance foray. Jio Financial has formed a joint venture with US-based asset manager BlackRock to enter the Indian asset management space.
However, JFS shares are expected to face selling pressure from exchange-traded funds (ETFs) and index funds.
Jio Financial, currently a part of the Nifty 50 and Sensex, will be removed from both indices three days after its listing. According to Nuvama Alternative & Quantitative Research, the exclusion will occur on August 24. Following the exclusion, passive mutual fund schemes tracking the Nifty 50 and Sensex will need to sell off their holdings in the stock. Nifty 50 schemes currently hold around 90 million shares, while Sensex funds possess 55 million, as per Nuvama, with their holding worth around Rs 3,800 crore at the present price.
Last week, JFS shares were credited to the demat accounts of eligible Reliance Industries Ltd (RIL) shareholders. As a part of the demerger, RIL shareholders were allotted one share of Jio Financial for each share they held.
With the current valuation, Jio Financial will rank as India’s 33rd most valuable company and the 3rd biggest NBFC after Bajaj Finance and Bajaj Finserv. Among the banks, only five are currently valued higher than Jio Financial.
Jio Financial holds a 6.1 per cent stake in RIL, currently valued at Rs 1.08 trillion. On Friday, RIL’s shares closed 0.51 per cent higher at Rs 2,551, valuing the country’s most-valued firm at Rs 17.26 trillion.
Analysts view the demerger as a strategic move by the oil-to-telecoms conglomerate, as it may help the new company attract various investors, strategic partners, and lenders with specific interests in the financial services business.
Investors allotted one share of JFS for every RIL share held
Share priced at Rs 261.85 currently; analysts expect gains on Monday
Nifty50, Sensex funds to offload 145 million shares, say analysts
Holding worth around Rs 3,800 crore at the present price