Jio Financial valued at Rs 1.66 lakh cr, making it no.3 NBFC in India

Mumbai: Jio Financial Services (JFSL), the demerged financial services business of Reliance Industries, has been valued at ₹1.66 lakh crore after its stock was priced at ₹261.85 per share following a special trading session on Thursday. The stock price was above Dalal Street’s expectations of ₹160-200 apiece, catapulting Jio Financial’s market capitalisation above established lenders such as IndusInd Bank, Bank of Baroda, PNB or Canara Bank.

The ‘constant price’ of Jio Financial was discovered in a session held on the NSE on Thursday between 9 AM and 9.45 AM. This is the first time NSE held a special session for ‘constant price’ discovery following a demerger.

Jio’s price is the difference between Reliance’s closing price of ₹2,841.85 on Wednesday and the price of ₹2,580, which was derived during the special session on Thursday. Reliance Industries shares gained 1.19% to close at ₹2,619.80 on Thursday. RIL shares, along with JFSL, are at all-time highs.

“Jio Financial’s discovered constant price of ₹261.85 per share against an implied value of ₹133 per share is due to its strong net worth of about ₹1 lakh crore on a consolidated basis which is seen enabling faster growth in an already competitive financial marketplace,” said Pankaj Pandey, head – research, ICICI Securities.

Centrum Broking estimates Reliance Strategic Investments’ (Jio Financial) networth at ₹235 billion ( ₹23,500 crore), based on Reliance Industries’ standalone networth of ₹5 trillion (₹5 lakh crore) and Reliance Strategic Investments’ apportionment ratio (demerger cost of share acquisition) of 4.68%.

Jio shares will be part of various indices including the Nifty and Sensex but they will not be traded till the shares are listed. Jio will be the 51st constituent in the Nifty and 31st in the Sensex and will be considered in weight calculations of the indices.

While the actual listing date of Jio is not known yet, analysts expect the firm’s shares to begin trading normally in September or October. The spun-off entity will be excluded from these indices at the end of the day on the third day of its listing.The valuation derived from Thursday’s session makes Jio the most valuable non-banking finance company after the Bajaj twins – Bajaj Finance and Bajaj Finserv. Bajaj Finserv had a 52.49% stake in Bajaj Finance as on March 30, 2023.

“We expect the company to deliver higher growth given the huge opportunity in the financial sector in the country 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,” said Pandey.

Reliance announced the demerger of its financial services undertaking into Reliance Strategic Investments, which was renamed Jio Financial. Under the demerger arrangement, shareholders of Reliance will get one share of the demerged entity for every share held by them in the conglomerate on July 20, which was the record date. As a result, the shareholding pattern in Jio will be the same as Reliance Industries.

The demerger of the financial services business involves a spin-off of Reliance Industries’ 6.1% treasury shares.

“Investors had questions on whether the 6.1% treasury shares in RIL will be transferred at Book Value or Market Value,” said Centrum’s analyst Sonal Gandhi in a client note. “The net worth of ₹235 billion suggests that the transfer will be at the Book Value.”