Mukesh Ambani-led Reliance Industries Ltd’s demerged entity Jio Financial Services, formerly Reliance Strategic Investments, will be the third-biggest non-banking financial company after the Bajaj Twins—Bajaj Finance and Bajaj Finserv—after its listing, the date for which is yet to be announced. However, at the discovered price of Rs 261.85 per share, the market capitalisation of Jio Financial Services will be around Rs 1.7 lakh crore at the time of listing.
Jio Financial’s discovered price is the difference between RIL’s closing price of Rs 2,841.85 on July 19 and the price of Rs 2,580, which was derived during the special trading session on July 20. As of July 21, 2023, Bajaj Finance and Bajaj Finserv had respective market caps of Rs 4.6 lakh crore and Rs 2.6 lakh crore. Jio Financial will be larger than LTIMindtree, Tata Steel, Coal India and Bajaj Auto, which have market caps between Rs 1.3 lakh crore and Rs 1.5 lakh crore.
The discovered price of Jio Financial is significantly higher than the consensus brokerage projections of Rs 160-190, according to V.K. Vijayakumar, Chief Investment Strategist of Geojit Financial Services. “This reflects the market’s fancy for the stock and a vote for its potential. The stock is likely to list near discovered price if the market sentiment remains buoyant.”
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Market analysts predict JFSL to be listed in a month because it is being spun out from RIL. Recently, Piramal Pharma, which was demerged from Piramal Enterprises, was listed 45 days after the record date. However, NMDC Steel, which was demerged from NMDC last October, took nearly four months to list post the record date.
According to the predetermined share ratio, RIL shareholders will receive one share of JFSL for each share they held in RIL till the record date of July 20. The energy-to-telecom behemoth RIL had 3.5 million shareholders as of June 30, according to data from the BSE.
The growth potential of Jio Financial is huge since Reliance Digital can bundle its digital products like smartphones and TVs with it, says Vijayakumar. Meanwhile, Jio Financial has formed a joint venture (JV) with BlackRock to foray into asset management. Both firms are targeting an initial investment of $150 million each in the JV, as per a stock exchange filing.
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Pankaj Pandey, Head of Research at ICICI Direct, said, “We expect Jio Financial to deliver higher growth given the huge opportunity in the sector and its strong capitalisation, which will ensure that the company would not need to raise external equity capital for a reasonably long period of time, thereby limiting any dilution overhang.”
