Jio Financial Services' Spectacular Share Price Surge - A Game-Changer for Reliance Industries

The Ambani-backed Financial Venture's Market Valuation Shocks Investors and Brokers

 

Date: 20th, July 2023

Introduction:

In a stunning turn of events, Jio Financial Services (JFSL), the new venture spearheaded by billionaire Mukesh Ambani, has taken the financial world by storm. Today, its share price reached an unprecedented Rs 261.85 per share, leaving even seasoned brokerage estimates of up to Rs 190 per share in the dust. Let's delve into the thrilling journey that led to this market-shattering moment and explore the implications for Reliance Industries (RIL) and its shareholders.

The JFSL Rally:

During a special pre-open call auction session on Thursday, the market valued Jio Financial Services (JFSL) at an astonishing Rs 261.85 per share on NSE. This remarkable achievement becomes even more impressive when considering the impact of the demerger, which initially led to a temporary dip in Reliance Industries' (RIL) share price to Rs 2,580. However, RIL made a swift recovery, bouncing back by 2% as normal trading resumed at 10 am.

Exceeding Expectations:

RIL's announcement regarding the post-demerger acquisition cost for Reliance Strategic Investments Limited, now renamed JFSL, stood at 4.68%. Based on Wednesday's closing price of Rs 2,840 on BSE, the acquisition cost was revealed to be Rs 133. This figure left all brokerage predictions in the dust, as their estimates fell between Rs 160-190 per share. Dr. V K Vijayakumar of Geojit Financial credited the market's unwavering faith in Jio Financials' potential and its far-reaching influence through RIL's diverse business segments, particularly Reliance Retail.

Impressive Market Capitalization:

Following the demerger, JFSL's total outstanding shares amounted to an astonishing 635.32 crore, culminating in a staggering total market capitalization of Rs 1.66 lakh crore. This market valuation signals a bright future for the newly established financial powerhouse.

The Calculations Behind JFSL's Share Price:

The intriguing process of determining JFSL's share price involved a special pre-open trading session conducted by stock exchanges BSE and NSE from 9 am to 9:45 am. The constant price of JFSL was derived from the difference between RIL's closing price on Wednesday and the price established during the special pre-open session on the present day.

Shareholder Benefits:

Shareholders of RIL on July 19, when trading concluded, are in for a treat. They will receive JFSL shares in a generous 1:1 ratio. However, patience will be required, as trading in JFSL shares will be temporarily restricted until the company is officially listed on stock exchanges. This listing is expected to occur within the next 2-3 months and will be announced during Reliance's highly anticipated AGM.

A Game-Changer for Indices:

JFSL's inclusion in major indices, including the prestigious benchmark Nifty50, was confirmed at the constant price determined during the special pre-open session. This feat signifies JFSL's undeniable impact on the financial landscape.

Unlocking Shareholder Value:

The decision to demerge JFSL from RIL stems from the understanding that the financial services sector requires a distinct growth strategy, tailored to its specific risks, market dynamics, and trajectory. This separation enables JFSL to capitalize on higher leverage for its growth and is perceived as a value unlocking exercise for RIL shareholders.

Conclusion:

The soaring share price of Jio Financial Services (JFSL) has created waves in the financial markets and left investors and brokers astounded. This new venture, backed by the Ambani family, has the potential to redefine the landscape of financial services and contribute significantly to the growth of Reliance Industries (RIL). As JFSL prepares for its listing, the anticipation for its future performance reaches a fever pitch, and the entire industry is eagerly awaiting the forthcoming AGM for further revelations. With the dawn of a new era in the financial world, JFSL is poised to make its mark as a true game-changer.