For the first 10 days, JFSL will trade in the T Group segment, which means that intraday trading won’t be possible in the stock and there will be a circuit limit of 5% either ways. This will restrict major moves in the stock, said Apurva Sheth of SAMCO Securities.
“We expect that there could be some selling pressure as investors who would have bought the shares purely to benefit from demerger would like to book profits, if they get a higher price than their initial investment in RIL,” he told ETMarkets.
As part of a special price discovery session held on the record date of July 20, the new stock’s pre-listing price came out to be Rs 261.85 per share, which was much higher than the brokerage estimate of around Rs 190 and RIL’s cost of acquisition of Rs 133.
Shares of the NBFC were credited to demat accounts of eligible RIL shareholders last week in 1:1 ratio, which means that for every RIL share held as on the record date of July 20, shareholders got one share of JFSL.
While some analysts are optimistic due to the strong demand for financial services in India and the company’s robust parentage, others are more cautious. “Their reservations stem from the fact that Jio Financial is still in its nascent stages and hasn’t yet achieved profitability,” said Sonam Srivastava, Founder and Fund Manager at Wright Research.
She suggests that RIL shareholders who have acquired Jio Financial shares due to the demerger should consider retaining them for an extended period. “Jio Financial boasts a promising business model and is poised to leverage the escalating demand for financial services in India. However, potential investors should be aware that the stock might be somewhat illiquid at present, which could lead to short-term volatility,” the fund manager said.As the financial services industry already boasts of several established players, JFSL, which comes with a solid parentage, technology and financial backing, will still take its own time to set up businesses and make a dent on the competition.
“Investors shouldn’t expect miracles in the short to medium term. Only investors who have a horizon beyond 5 years can consider holding on to the stock. Others are better off by exiting JFSL and entering a bank/NBFC with a fully functional business,” Seth said.
The long-term outlook for Jio Financial Services Limited (JFSL) is bullish due to its focused transition to an independent financial entity with interests spread across consumer and merchant lending, asset management, insurance, payments and digital broking.
JFSL has already announced a 50:50 joint venture entity with BlackRock to enter the mutual fund industry.
“BlackRock’s global fund management expertise combined with Jio’s technical prowess and expanding clientele could reshape India’s asset management industry, valued at Rs 44.3 trillion ($540.4 billion). Holding these stocks long-term could offer RIL shareholders an opportunity to benefit from the potential transformation of India’s asset management landscape,” said Anirudh Garg, Partner & Head of Research at Invasset PMS.