Reliance's Jio Financial Plunges On Market Entry, Valued At $19 Bn
Jio Financial Services (JFS), a spin-off from Mukesh Ambani's Reliance Industries, experienced a sharp decline on its trading debut as investors sought more clarity about the business's scope. The stock price had been set at Rs 261.85 during a special discovery session, valuing JFS at approximately Rs 1.7 trillion (USD 20.5 billion).
However, this price exceeded the earlier estimate of Rs 160-190 per share provided by analysts. On its debut, JFS shares fell 5 per cent, reaching the maximum decline allowed in a session. Over 73 million shares changed hands, resulting in a reduced valuation of Rs 1.58 trillion (USD 19 billion).
Reliance Industries' shares also dropped by 1.2 per cent, while the broader Nifty 50 index slightly rose by 0.5 per cent, partly due to a 2.5 per cent increase in the value of Bajaj Finance, a competitor to JFS.
Market experts emphasised that the true value of JFS would become clearer over time as earnings were reported and business operations unfolded. Investors are awaiting additional details about JFS, expected to be provided during Reliance's annual general meeting on 28 August.
While Reliance Industries approved the listing of 6.35 billion JFS shares, the exact stake represented by this number remained unclear. Under the demerger, Reliance Industries shareholders received one JFS share for each Reliance share they held.
Despite the lower valuation, JFS remains India's third-largest non-banking financial company (NBFC), trailing Bajaj Finance and Bajaj Finserv in terms of valuation. JFS is valued at Rs 1.58 trillion, compared to Bajaj Finance's Rs 4.15 trillion and Bajaj Finserv's Rs 2.32 trillion.
Non-Executive Chairman KV Kamath stated that JFS aspired to become a comprehensive financial services provider. While details about the company's plans were not disclosed, JFS had already announced a joint venture with BlackRock to introduce asset management services in India, involving an initial investment of USD 150 million each.
Analysts noted that JFS stood out from other fintech companies due to its access to substantial non-financial data gathered from Reliance's retail and telecom units. This data could be leveraged to offer financial services in real time, resembling the strategies of global giants like Alibaba, Amazon, and Google.
As part of the demerger process, JFS absorbed several units from Reliance Industries, including Reliance Retail Finance, Reliance Payment Solutions Ltd, Jio Information Aggregator Services, and Reliance Retail Insurance Broking. The inclusion of Jio Payments Bank is pending central bank approval.
While JFS's weak trading debut was attributed to index funds exiting their positions, the company's presence in major global indices and India's Nifty 50 index still holds promise. JFS will be removed from some Indian indices three days after its listing, adhering to exchange regulations.
