- Date : 21/08/2023
- Read: 3 mins
Jio Financial Services grapples with a 5% lower circuit post-listing, sparking investor questions. Analysts urge patience for strategic clarity amid volatile debut.
Jio Financial Services (JFS), the recently listed financial arm of Reliance Industries Limited (RIL), has encountered a bumpy start as it witnessed a 5% lower circuit on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This plunge immediately after its listing has raised questions about the future trajectory of the stock and investor sentiment. While the debut didn't meet the bullish expectations, what lies ahead for Jio Financial Services shares?
Highlights -
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Jio Financial Services faces a 5% lower circuit post listing.
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Expect heightened moves in the early days due to the T2T segment.
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JFS forms a joint venture for asset management with $150 million.
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Analysts suggest a fair value of around Rs 180 apiece.
Immediate Volatility and Investor Response
In a rather unsurprising turn, JFS shares saw a 5% dip on their debut, triggering the lower circuit and prompting concerns among investors. The stock opened at Rs 262 on the NSE and Rs 265 on the BSE but quickly spiralled downward to Rs 248.90 and Rs 251.75, respectively, placing its market value at nearly Rs 1.59 lakh crore.
This initial volatility is likely to persist, especially considering that JFS is trading in the Trade-to-Trade (T2T) segment for the first ten days, allowing only delivery-based trades. This raises the need for investors to tread cautiously.
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Understanding the Strategy and Opportunity
Manish Chowdhury, Head of Research at StoxBox, advises investors to treat JFS as a new-age business and seek clarity on its strategy and focus areas. While JFS carries the disruptive legacy of its parent company, RIL, Chowdhury suggests awaiting tangible business execution on the ground, particularly in a fiercely competitive industry.
A Glimpse of the Company
JFS holds the promise of shareholder value, as underscored by its allocation of shares to eligible Reliance Industries shareholders at a 1:1 ratio. Its listing price of Rs 261.85 exceeded brokerage expectations, reflecting optimistic pricing. The company's foray into a joint venture with BlackRock Inc. to introduce asset management services in India with a substantial initial investment of $150 million each. The company's non-executive chairman, KV Kamath, envisions it as a "full-service financial player," hinting at an ambitious roadmap.
Expert Perspectives for Investors: The Takeaway
Chandan Taparia, Derivative and Technical Analyst at Motilal Oswal, recommends holding JFS shares, but with a stop loss at Rs 232 apiece. The current market price surpasses the stock's fair value, suggesting a potential downward adjustment.
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Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
