Jio Financial Services (JFS) has been valued at a staggering $20 billion, surpassing expectations, following its demerger from Reliance Industries. At this valuation, JFS would rank among the top 40 Indian firms by market capitalization, with Reliance leading the list at $233 billion.
Demerger and Ambitions in Financial Services Sector
The demerger, announced last October, serves as a strategic move for Reliance Industries to expand its presence in the lucrative financial services sector. As Reliance already holds a non-bank financial company license, JFS’s demerger allows the conglomerate to explore new growth opportunities.
Special Trading Session and Higher Stock Price
In a first-of-its-kind event, stock exchanges conducted a special hour-long “pre-open call auction” trading session to determine JFS’s share price. The stock price of JFS was set at Rs 261.85, significantly higher than analysts’ estimates of Rs 160 to Rs 190. Stockholders will receive one JFS share for each Reliance share they hold.
Positive Outlook and Access to Data
Market confidence in JFS’s future performance is evident, with its exposure to Jio’s vast mobile customer base and its substantial holding of Reliance’s treasury shares. JFS is poised to benefit from growth opportunities in the retail and telecom sectors.
Inclusion in Major Indices and Lending Prospects
JFS will be included in major Indian indices, including the benchmark Nifty 50, further boosting its prominence. Analysts believe that JFS’s access to extensive data from Reliance’s telecom and retail businesses will enable it to kick-start lending operations. Macquarie Research predicts that JFS could become an AAA-rated entity with attractive borrowing rates.
Reliance’s Stock Surge
Since setting the record date for the demerger on July 8, Reliance shares have surged approximately 8%, showcasing the market’s positive reception of the upcoming move.
As JFS enters the Indian market with its remarkable valuation, it is expected to be a major player in the financial services sector, benefitting from Reliance’s strong foundation and growth prospects.
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