Shares of Jio Financial Services remained under pressure on Tuesday, hitting their 5 percent lower circuit for the second consecutive session on the back of profit booking.
The stock was trading at ₹239.20 today, down as much as 8.6 percent from its discovered price of ₹261.85 after the special pre-open session held on July 20, 2023.
The stock listed at ₹265 on the BSE and ₹262 on the NSE, just a little higher than its discovered price.
Its market capital, which was at ₹1.68 lakh crore at the time of listing, has also declined to almost ₹1.52 lakh crore in just 2 sessions.
Despite the drop, the stock remains India's third-largest NBFC after Bajaj Finance and Bajaj Finserv. Experts also retained their long-term positive outlook for the firm even though the near term may witness some volatility.
"Fundamentally, with a balance sheet size of Rs. 1.1 Lakh Crore and a core net worth of ₹31,600 Crore, Jio Financial presents a promising and well-structured business model. JFSL has already announced a 50:50 joint venture entity with BlackRock to enter the mutual fund industry but all eyes are on Reliance AGM which is scheduled on 28th August, as the market eagerly awaits the unveiling of upcoming strategies for Jio Financial. In the short term, the stock might be somewhat illiquid at present, which could lead to short-term volatility. However, medium and long-term prospects are robust, offering a positive outlook. Current shareholders are advised to retain their holdings, while those considering an investment can confidently make a purchase at this time," advised Shrey Jain, Founder and CEO SAS Online.
Meanwhile, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, also stated that JFSL’s valuation is based on expectations surrounding its future growth potential and its 6.1 percent stake that it owns in RIL. The future growth prospects of JFSL are indeed bright since it can scale up its business hugely with its enormous connection with consumers and merchants. But institutional selling is a drag on the share price in the near term. Since the stock is in the T segment, institutional selling is dragging the price down.
For the first 10 days post the listing, the stock will trade in the T Group segment on both BSE and NSE, which means that shares can be traded only on a compulsory delivery basis and intraday trades will not be possible. An investor cannot buy and sell shares of JFS on the same day, or before the shares are credited to the demat account. In that case, the order will be rejected. Also, the upper and lower circuit limit of the stock would be limited to 5 percent, restricting any major movement in the scrip.
On July 20, 2023, a special pre-open session was held for RIL and RSIL from 9 am to 10 am. In that session, RIL's NBFC unit Jio Financial Services' discovery price came out to be ₹261.85 per share, beating estimates of up to ₹170. Post that session, Jio Financial Services stock remained as a 51st Nifty constituent at this constant price till listing and did not trade.
Meanwhile, the stock will be removed from Nifty 50, three days after its listing, on August 24, 2023.
In the demerger, RIL has allotted one share of Reliance Strategic Investments Limited for every one RIL share to shareholders.
Jio Financial Services will primarily operate in the NBFC market and credit market segments and has strategic plans to expand its operations into insurance, digital payment, and asset management verticals.
