Reliance spin-off Jio Financial Services worth Rs 160-190/share: Analysts

Reliance Strategic Investments Ltd – to be renamed Jio Financial Services (JFS) Ltd – will be demerged on July 20, with Reliance shareholders getting one JFS share in addition to each Reliance share they hold.

Axis Securities, on Monday, recommended buying Reliance as “a more economical way” to buy JFS, which it pegs at 160 rupees ($1.95) per share.

Nuvama Institutional Equities values JFS at 168 rupees per share, Jefferies at 179 rupees, JPMorgan at 189 rupees and Motilal Oswal at 190 rupees ($2.32).

Overall, JFS could be India’s fifth-largest financial services company in terms of net worth, Macquarie estimates.

Reliance’s shares have gained more than 6% since July 8, when the record date was fixed, compared to the benchmark Nifty 50’s 2% gain, as investors sought exposure to JFS.

“Investors feel JFS could not only lead to value unlocking but could go on to become a significant financial services player, comparable to Bajaj Finance,” said Gurmeet Chadha, managing partner at asset management firm Complete Circle. JFS will also include Reliance Retail Finance, Reliance Payment Solutions Ltd, Jio Information Aggregator Services and Reliance Retail Insurance Broking, with Jio Payments Bank to follow after the central bank’s clearance.

Veteran banker KV Kamath will be non-executive chairman and former ICICI Bank executive Hitesh Sethia will be CEO.

“JFS will differ from most other fintechs in having access to huge amounts of data gathered from a non-financial relationship and it can process and analyse those in real time to offer financial services like Alibaba, Amazon, Apple, Facebook, Google etc,” Macquarie analyst Suresh Ganapathy wrote.

Since its main sponsor Reliance already has a non-bank finance company licence, Ganapathy wrote, JFS can kick-start consumer and merchant lending and will “likely be a AAA-rated entity which can borrow at attractive rates.”