Jio Financial makes tepid debut, hits lower circuit

Shares of Jio Financial Services Ltd (JFSL)fell 5% on its market debut on Monday and hit the lower circuit limit. The demerged financial services unit of Reliance Industries, however, still commanded a market valuation of nearly Rs 1.6 lakh crore.

While the extent of public knowledge on the company’s underlying business is limited to its recently announced asset management joint venture with BlackRock, analysts say Jio Financial is expected to offer a broad range of financial services solutions including insurance, digital payments, investment and asset management.

On the Bombay Stock Exchange, shares of the company began the trade at Rs 265, as against the discovery price of Rs 261.85. However, the stock later fell by 3.85% to hit Rs 251.75, its lower circuit limit

On the National Stock Exchange, the company’s shares began trading on Rs 262 but later declined 4.94% to Rs 248.90, again the lower circuit limit.

The company’s valuation makes it the 34th most valued firm in India right now. In volume terms, 35.51 lakh shares of the company were traded on the BSE and over 7.47 crore shares on the NSE.

“JFSL’s valuation is based on expectations surrounding its future growth potential and the 6.1% stake that it owns in Reliance Industries Ltd . The future growth prospects of JFSL are indeed bright since it can scale up its business hugely with its enormous connect with consumers and merchants,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

He added that selling by institutional investors will be a drag on the share price in the near-term.

JFSL was demerged from Reliance last month.

With the company's listing, the BSE Sensex and the NSE Nifty added Jio Financial Services to their indices. This has been done to ensure price stability and limit volatility in shares of RIL, in view of the demerger as part of the revised methodology of the exchanges to treat demergers. The newly listed entity will be removed from the indices after the end of the day on the third day of its listing.

“One can expect Jio Financial Services to attempt delivering full-stack financial services. If one were to consider a combination of Jio's current technology capabilities, access to different market segments, hiring trends and indications through various public addresses, one could paint a tentative roadmap for the newly listed financial services giant,” said Nirav Karkera, Head of Research, Fisdom.

Karkera said that considering the company’s access to Reliance' physical presence in the retail segment and partner stores, one can expect Point of Sale, and business transaction platforms to feature early on the roadmap, along with merchant financing on the lending side of the business.

“With a distinct competitive edge in terms of cost of funding and access to distribution through digital channels, retail lending can also be expected to feature early on in the roadmap. At the same time, a foray into insurance also makes it to the top of the agenda,” Karkera said.

The broader markets rose on Monday, on back of tech stocks and other financial companies, beating the Jio Financial slump.