Jio Financial Services shares continue to slide; stock hits 5% lower circuit again

JFS share price NSE, JFS share price today: The newly-listed Jio Financial Services (JFS), the demerged financial services unit of Reliance Industries (RIL), slipped again in Tuesday's session. The stock throughout the session remained locked in the 5 per cent lower circuit at Rs 236.45 on the NSE. The scrip made a listless debut on the bourses on Monday (August 21), as it listed at Rs 262 on the NSE and Rs 265 on the BSE against its discovered price of Rs 261.85. The domestic stock exchanges, BSE and NSE, held a one-hour special 'pre-open' session on July 20 for RIL to discover the price of its demerged entity.

JFS' share price was calculated as the difference between Reliance's last close and the stock's settling price at the end of the special session. The price beat all the analysts' estimates, as they had estimated the share price of the demerged entity between Rs 160 and Rs 190 per share.

G Chokkalingam, Founder and Managing Director, Equinomics Research, explained that the stock has been falling, mainly due to the sale of JFS shares by passive global funds as part of the restructuring of their portfolios.

The analyst believes this is an opportunity to invest in this stock for the medium to long term. "Access to the Jio mobile platform and Reliance retail stores, the holding of Reliance treasury shares, and Reliance’s management capabilities would make JFS an ultimately wealth-creating stock," the market expert added. 

All about demerger 

Reliance Industries announced last October that it would demerge and list its financial services business, Reliance Strategic Investments, which will be renamed Jio Financial Services (JFS). Reliance shareholders would get one share of Jio Financial Services for holding one share of Reliance.

The company had set July 20 as the demerger record date, or the cut-off date used to determine which shareholders are eligible. Veteran banker KV Kamath will be the non-executive chairman and former ICICI Bank executive Hitesh Sethia will be the CEO.

Analysts believe JFS' access to vast amounts of data and Reliance's possession of a non-bank finance company licence will help the company kick-start lending. Macquarie Research also said the company will "likely be an AAA-rated entity that can borrow at attractive rates."

(with inputs from Reuters)

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