Jio Financial Services (JFSL) on Thursday became the second largest non-bank lender in terms of market capitalisation as it was valued at $20 billion after a special pre-open market session.
The session was held between 9am and 10am to determine the share price of JFSL after which JFSL was priced at Rs 261.85 apiece. This will take its implied market value to Rs 160,000 crore given its outstanding shares estimated at 620 crore.
JFSL has thus become the second largest NBFC by market value after Bajaj Finance which commands a market cap of Rs 4.60 lakh crore.
It also overtook Cholamandalam Investment and Finance which had held the second spot with a market cap of Rs 95,000 crore. The market-discovered price also put JFSL as India’s 32nd most valuable company by market capitalization ahead of the likes of Adani Ports, Adani Green, Tata Steel, Coal India, HDFC Life, IOC, and Bajaj Auto.
The price of Rs 261.85 per share was much higher than brokerage estimates of Rs 160-190 per share.
According to V.K. Vijayakumar, chief investment strategist at Geojit Financial Services, the high price is a reflection of the market’s assessment of Jio Financials’ potential.
“The wide reach of JFSL through RIL’s other business segments such as Reliance Retail has the potential to grow the company at a fast pace for many years to come. The market is discounting this potential,” he added.
RIL had announced the demerger of its financial services undertaking into RSIL (Reliance Strategic Investments Ltd), which will be renamed JFSL. Shareholders will get one share of the demerged entity for every RIL share held.
Market circles said that while JFSL share will figure among some indices, its price will be the same at Rs 165.85, and investors will not be able to trade in the counter.
This can be done only after its listing when RIL completes the share allotment. Therefore, some experts feel that it is early to rejoice about the tall valuation since Reliance is yet to spell out its business model for the new entity.
“But don’t go overboard, Jio Fin shares haven’t traded. What this means is that in the Nifty, Jio Financials will be valued at 160,000 crore temporarily,’’ tweeted Deepak Shenoy, founder CapitalMind.
However, observers do feel that JFSL could disrupt the financial services space as Reliance did for other businesses. They added that the company would benefit from the huge network and customer base of Reliance Retail and the subscriber base of Jio.
