Jio Financial Services Valued At $20 Billion, Above Estimates

At a $20 billion valuation, JFS would be one of the top 40 Indian firms by market capitalisation, in a list headed by Reliance at $233 billion

Jio Financial Services (JFS) has been valued at around $20 billion after its stock price was set at a much higher-than-expected Rs 261.85 ($3.19) in its demerger from Mukesh Ambani-led Reliance Industries. According to Reuters, the demerger, which was announced last October, is seen as oil-to-retail conglomerate Reliance's way of expanding in the lucrative financial services sector, especially as it already has a non-bank financial company licence. On NSE, JSFL to list at Rs 273 per share.

At a $20 billion valuation, JFS would be one of the top 40 Indian firms by market capitalisation, in a list headed by Reliance at $233 billion. In a first, stock exchanges held a special hour-long "pre-open call auction" trading session for Reliance on Thursday to determine JFS' share price.

The price was determined as Rs 261.85, or the difference between Rs 2,841.85, Reliance's closing price on Wednesday, and Rs 2,580, its price at the end of the special session. The stock price of JFS is higher than analysts' estimate of Rs 160 to Rs 190. Stockholders will get one JFS share for each Reliance share they hold, as Reuters stated.

JFS on Wednesday logged a net profit after tax of Rs 145 crore ($17.7 million) for April-June based on revenue of Rs 215 crore.

G Chokkalingam, founder and head of research at Equinomics, told the news agency, "This shows people are quite confident about the future performance of JFS with exposure to Jio's mobile customer base. It also holds nearly Rs 1 trillion of Reliance's treasury shares. These factors have given lot of confidence to investors. Reliance Industries will also rise significantly from here as JFS unlocking is just the beginning and there will be much more for the shareholders from growth opportunities for retail and telecom.”

JFS will be included in major Indian indices, including the benchmark Nifty 50, but will not trade until it is listed, the date for which Reliance will likely set at its upcoming annual general meeting.

JFS' access to vast amounts of data from Reliance's telecom and retail businesses will also help it kick-start lending, analysts have said. Macquarie Research said JFS would likely be an AAA-rated entity that could borrow at attractive rates.

Reliance shares had surged about 8per cent from July 8, when it set the record date for the demerger, through Wednesday.