As its stock price was established at a significantly higher-than-anticipated 261.85 rupees ($3.19) during its demerger from Indian billionaire Mukesh Ambani's Reliance Industries, Jio Financial Services (JFS) has been valued at almost $20 billion (RELI.NS).
Reliance, an oil-to-retail conglomerate, is regarded as using the demerger, which was announced in October, as a chance to increase its presence in the lucrative financial services industry, especially given that it already holds a non-bank financial firm license.
Jio Finance, valued at $20 billion, would rank among the top 40 Indian corporations by market capitalization, behind Reliance ($233 billion), which leads the list.
An unprecedented hour-long "pre-open call auction" trading session for Reliance was staged on Thursday at India's major stock exchanges.
The stock price for JFS is higher than experts' predictions of 160 to 190 rupees. For every Reliance share a shareholder has, they will receive one JFS share.
"This demonstrates that people have a lot of faith in JFS's ability to operate well in the future given its exposure to Jio's mobile client base. Moreover, it has treasury shares from Reliance worth approximately 1 trillion rupees. Investors now feel much more confident as a result of these considerations "said G Chokkalingam, the company's founder and head of research.
The JFS unlocking is only the beginning, and there will be much more for the shareholders from development potential for retail and telecom, he said. "Reliance Industries will also climb dramatically from here," he added.
According to experts, JFS's access to massive volumes of data from Reliance's retail and telecom operations would also help it launch lending. According to Macquarie Research, JFS would probably get a AAA rating and be able to borrow money at favorable rates.
Reliance Strategic Investments, the division that will become JFS, said late on Wednesday that its April–June earnings were 1.45 billion rupees ($17.7 million) after taxes on revenue of 2.15 billion rupees.
From July 8, when it established the record date for the demerger, to Wednesday, Reliance shares had increased by roughly 8%.
After the special session, the stock was trading roughly 1.1% higher at 11.50 a.m. IST. It has increased by 11.6% thus far this year, beating the Nifty 50's growth of 9.5%.
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