JFS Listing: Why Jio Financial Services' Shares Declined On Stock Markets Debut

Jio Financial Services Ltd (JFSL) made a tepid debut on the stock exchanges on Monday. The stock was listed at Rs 265 on the BSE and Rs 262 on the NSE. The listing price was marginally higher than its discovered price of Rs 261.85 per share. It was the first listing from Mukesh Ambani-led conglomerate camp in the last two decades.

The stock touched an intraday low of Rs 248.90 on the NSE and Rs 251.75 on the BSE, hitting a 5 per cent lower circuit on both exchanges.

According to market analysts, the fair value of JFSL's share price is around Rs 150–180 per share, and the market is likely to correct further as the stock is still trading at much higher price than its assumed fair value. On the basis of the fair value of the company, the market cap of Jio Financial Services Ltd. would be around Rs 1.10 lakh crore to Rs 1.15 lakh crore.

Avinnash Gorakssakar, Head of Research at Profitmart Securities, said the listing of Jio Financial Services was lacklustre as the share price had already been discovered at around Rs 260. Going ahead, unless the market gets a hint of the narratives in the business ahead by the company, its future growth targets will remain range-bound.

JFSL's share listing commenced on a subdued note, possibly due to a higher-than-anticipated price discovery, said Santosh Meena, Head of Research at Swastika Investmart Ltd. In addition, the short-term outlook is uncertain due to a lack of clarity about business direction and profitability. However, the long-term outlook remains optimistic on the back of its robust pedigree and extensive network.

"Consequently, it's advisable for long-term investors to retain Jio Financial Services shares, while short-term investors can stay away. Anticipate potential insights into Jio Financial Services' future plans during the upcoming Reliance AGM," Meena added.

"Significant selling will be expected from domestic funds and GDR holders over the next few days. Valuation also appears quite rich, given that the management had indicated a fair price of Rs. 133/share previously," said Gowtham V., Senior Analyst, Investment Research and Advisory, Aranca.

Last month, Reliance Industries announced its foray into the $540 billion mutual fund industry in India through a 50:50 joint venture with the world’s largest asset management company, BlackRock. Reliance aims to provide affordable and innovative investment solutions to millions of investors in the country.

Prashanth Tapse, Senior VP Research at Mehta Equities, said that based on business interest, the long-term outlook for JFSL is bullish due to its focused interest in consumer and merchant lending, asset management, insurance, payments, and digital broking.

"It has already announced a 50:50 joint venture entity with BlackRock to enter the mutual fund industry. As of today, short-term euphoria on valuations would remain a concern before it settled near the street fair value. We remain neutral on JSL for the short term," he said.

Reliance Industries is set to hold its 46th annual general meeting (AGM) with the shareholders on 28 August. Market participants are looking forward to it, as Chairman Mukesh Ambani has historically made several key announcements in AGMs. Investors are anticipating a game plan for JFSL in the fast growing financial services industry at the upcoming AGM.

The shares of Jio Financial Services have been admitted to dealings on the exchanges on the list of T Group of Securities. The stock will be in the Trade for Trade segment for 10 trading days.