Reliance-JFSL demerger: What is the new demerged Jio Financial Services: After its demerger from Reliance Industries Ltd (RIL), Jio Financial Services Ltd (JFSL) is projected to be listed on the NSE at approximately ₹273 per share.
Introduction on Reliance-JFSL Demerger
The recent demerger of Jio Financial Services Ltd (JFSL) from its parent company, Reliance Industries Ltd (RIL), has sparked significant interest and speculation in the stock market. With JFSL’s shares set to list on the NSE at ₹273 per share, a considerable premium over the initial price, experts are buzzing with optimism about the prospects of this newly formed entity. In this article, we delve into the details and implications of the Reliance-JFSL demerger, shedding light on the nature and potential of Jio Financial Services.
The Valuations and Listing Price:
Following the demerger, the anticipated share price for Jio Financial Services is ₹273 per share, which reflects a notable increase from the softly accepted JFSL share price of ₹133 during the announcement of the acquisition cost by Reliance Industries Ltd. However, the current valuations of Jio Financial Services shares stand at ₹261.45 per share after the demerger.
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A Financial Powerhouse:
Experts believe that JFSL will emerge as a pure financial company, primarily focusing on lending, investing, and other financial business operations. The appointment of two renowned banking pioneers, KV Kamath and Hitesh Sethi, further reinforces this notion and underscores the company’s intent to establish a strong presence in the financial sector.
Companies Under Jio Financial Services:
Jio Financial Services Ltd encompasses various companies that have come under its umbrella following the demerger from Reliance Industries Ltd. These include Reliance Industrial Investments and Holdings (RIIHL), Reliance Payment Solutions, Jio Payments Bank, Reliance Retail Finance, Jio Information Aggregator Services, and Reliance Retail Insurance Broking. The demerger aims to distinguish the financial services business from other ventures and attract a distinct set of investors, strategic partners, lenders, and stakeholders.
Targeting Lending Business:
The primary focus of Jio Financial Services is expected to be on the lending business. With the expertise of KV Kamath and Hitesh Sethi in the field of banking and lending, respectively, the company is poised to become a hi-tech lending business enterprise. However, industry experts predict that Jio Financial Services will eventually expand its portfolio to encompass insurance, payments, digital broking, and asset management.
Unique Business Model:
Jio Financial Services sets itself apart from its peers in the Indian financial system through its distinctive business model. Unlike many competitors that heavily rely on leverage, JFSL is expected to adopt a leverage-free approach. This strategy aligns with the track record of Reliance Chairman Mukesh Ambani, who has exhibited a preference for a low-leverage business model. If successfully implemented, this approach could pose a significant challenge to existing players, especially non-banking financial companies (NBFCs) and potentially impact established entities like Bajaj Finance in the medium to long term.
RIL-Jio Financial Demerger Update: Reliance Industries Ltd (RIL) witnessed a rise in share price of over one percent following the demerger of its financial subsidiary, Jio Financial Services Ltd (JFSL). On the BSE, RIL’s share price showed a gain of 1.20% and reached ₹2,623.10 per share, while on the NSE, it rose by 1.67% to ₹2,620.00 per share.
After the special pre-opening session, the share price of RIL excluding JFSL was determined to be ₹2,580 per share, whereas Jio Financial Services was valued at ₹261.85 per share.
Conclusion on Reliance-JFSL demerger:
The demerger of Jio Financial Services from Reliance Industries has generated considerable excitement among investors and experts. As JFSL prepares to make its mark as a standalone financial entity, the company’s focus on lending, renowned leadership, and unique leverage-free business model bode well for its future prospects. While lending will be the initial emphasis, Jio Financial Services aims to diversify into other financial segments such as insurance, payments, and asset management. Investors and market participants eagerly await the listing of Jio Financial Services shares on the NSE to witness its potential in the evolving financial landscape.