Surabhi Gorebal, Pune
Following the setting of its stock price at a slightly higher-than-anticipated Rs 261.85 on Thursday, Jio Financial Services (JFS), the financial services division demerged from Indian conglomerate Reliance Industries, was valued at about $20 billion.
Reliance, controlled by billionaire Mukesh Ambani, undertook the demerger as a strategic move to expand into the profitable financial services sector, with the advantage of its non-bank financial company license.
In an unprecedented move, India’s main stock exchanges conducted a special hour-long “pre-open call auction” trading session for Reliance on Thursday to determine the share price of JFS. The difference between Reliance’s closing price on Wednesday at Rs 2,841.85 and its price at the conclusion of the special session at Rs 2,580 is what makes up the final price, which was set at Rs 261.85.
The stock price of JFS exceeded the estimates of analysts, who had predicted a range between Rs 160 to Rs 190. Shareholders will receive one JFS share for each Reliance share they currently hold.
JFS’s stock will be included in significant Indian indices upon listing, including the industry-standard Nifty 50. The date for listing is expected to be announced during Reliance’s upcoming annual general meeting.
Reliance said in October of last year that Reliance Strategic Investments would be demerged and become JFS.
JFS stands to benefit from access to substantial data from Reliance’s telecom and retail businesses, which will help facilitate its lending activities, according to analysts. Macquarie Research predicts that JFS will likely receive an AAA credit rating, enabling it to borrow at attractive rates.
Reliance Strategic Investments declared a standalone net profit after tax for the months of April through June of Rs 1.45 billion ($17.7 million), with total revenue of Rs 2.15 billion, late on Wednesday.
Reliance’s stock price had surged approximately 8% since July 8, when the record date for the demerger was set, up until Wednesday. Following the special session, the stock was trading about 1.4% higher at 10.16 a.m. IST. So far this year, the stock has risen by 11.6%, outpacing the 9.5% increase in the Nifty 50.