NEW DELHI – In a surprising turn of events, Jio Financial Services (JFSL), the latest venture of billionaire Mukesh Ambani, left market experts astounded as its initial share price soared to an impressive Rs 261.85 per share. This valuation surpassed brokerage estimates of up to Rs 190, defying expectations and generating significant excitement among investors.
On Thursday, the National Stock Exchange (NSE) conducted a special pre-open call auction session to determine the market price of JFSL. The outcome of this session led to the unexpected surge in the share price, signaling a promising future for the new financial services entity.
The decision to demerge Reliance Industries’ (RIL) financial services business and rebrand it as Jio Financial Services was a strategic move to unlock value for stakeholders. RIL revealed that the post-demerger acquisition cost for JFSL stood at 4.68%, translating to an acquisition cost of Rs 133 per share. This calculation was based on the closing price of RIL shares at Rs 2,840 on the Bombay Stock Exchange (BSE).
The valuation exercise for JFSL shares defied brokerage predictions, which had estimated the share price to fall within the range of Rs 160-190. The unexpected higher valuation has piqued the interest of investors and market watchers alike.
As part of the demerger plan, all RIL shareholders will receive JFSL shares in a 1:1 ratio. This means that for every 100 RIL shares held, investors will be allocated 100 JFSL shares. However, trading of JFSL shares will only commence after the official listing on stock exchanges, a date expected to be disclosed during Reliance’s forthcoming Annual General Meeting.
The inclusion of JFSL in major indices, such as the Nifty index, is anticipated to have a significant impact. This development could further boost investor interest and positively influence JFSL’s performance in the market.
The listing date for JFSL is projected to be within the next 2-3 months, and the company’s prospects appear promising. With access to vast amounts of data and a non-bank finance company license held by Reliance, JFSL is well-equipped to embark on its lending operations. Analysts speculate that the company’s strong position could potentially earn it an AAA rating, enabling JFSL to secure favorable borrowing rates.
The remarkable surge in JFSL’s share price has generated significant enthusiasm in the market. All eyes are now on JFSL as it progresses towards its listing date and subsequent trading on stock exchanges, with investors eagerly awaiting further updates on the venture’s future prospects.
Source:
https://www.reuters.com/markets/deals/reliance-jio-financial-demerger-what-you-need-know-2023-07-19/
