Jio Financial shares hit 5% lower circuit on mkt debut

Mumbai: Shares of Jio Financial Services, which was spun off from Reliance Industries in July, fell nearly 5% on Monday at its trading debut.

The stock hit the 5% lower circuit — the most it can fall in a day — to close at Rs 252 on the BSE. The stock is likely to have faced selling pressure from passive funds ahead of its exclusion from indices including the sensex and Nifty after three trading days, analysts said.

“The listing was below street expectations. Jio Financial will face short-term selling pressure as the street has assumed the fair value of the shares to be Rs 150-180 apiece,” Prashanth Tapse of Mehta Equities said.

After a 1-hour trading session last month, Jio Financial shares were priced at Rs 262 apiece — giving the company a valuation of nearly Rs 1.7 lakh crore. Even after the fall in stock price, Jio Financial, at Rs 1.6 lakh crore, is the second-most valued NBFC in India, behind Bajaj Finance. As part of the demerger, shareholders of Reliance Industries received one Jio Financial share for every RIL share. Analysts said some investors resorted to profit-booking amid lack of clarity over the company’s business. Investors expect RIL chairman Mukesh Ambani to give more details about Jio Financial during the Reliance AGM on August 28. “Jio Financial’s valuation is based on expectations surrounding its future growth potential and a 6.1% stake that it owns in RIL. Growth prospects are bright since it can scale up its business hugely with its connect with consumers and merchants. But institutional selling is a drag on the share price in the near-term,” V K Vijayakumar of Geojit Financial Services said.Jio Financial was temporarily added to the sensex and Nifty to reduce volatility.

Non-executive chairman of the company K V Kamath, a veteran banker and former chairman of ICICI Bank, said Jio Financial intends to be a “full-service financial services player”. He didn’t elaborate on the company’s business plans or outlook.

Jio Financial had last month announced a joint venture with BlackRock to start an asset management firm in India, with an initial investment of $150 million each.


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