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Reliance-JFSL demerger: After demerger of Jio Financial Services Ltd (JFSL) from its core Reliance Industries Ltd (RIL), Jio Financial Services share price is expected to list on NSE at ₹273 per share ( ₹2,853 - ₹2,580). This is ₹140 higher from the softly accepted JFSL share price of ₹133 by Reliance Industries Ltd while declaring the cost of acquisition details for RIL and JFSL. However, valuations of the Jio Financial Services shares are coming at ₹261.45 per share levels after demerger.
After strong than expected looking debut of Jio Financial Services shares, stock market experts are highly bullish on this new Reliance entity on Dalal Street. They believe that JFSL would be a pure financial company that will be in lending, investing and other financial business'. Appointment of two banking pioneers KV Kamath and Hitesh Sethi is a glaring example of it.
Jio Financial Services after demerger
On companies coming under the umbrella of Jio Financial Services Ltd after demerger from Reliance Industries Ltd, Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio said, "JFSL is a financial services undertaking with investments in six companies — 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 Bonanza Portfolio expert said that demerger decision is basically taken to keep financial service business distinct from other businesses and may attract a different set of investors, strategic partners, lenders and other stakeholders. Post demerger, aim is to lend to consumers and merchants based on proprietary data analytics and eventually branch out to insurance, payments, digital broking and asset management.
On what Jio Financial Services Ltd would be as a company, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "As the name suggests, JFSL would be a pure financial company. But, I believe they would first target the lending business because they have appointed two big names of banking business KV Kamath and Hitesh Sethi. Both are pioneer in lending business. But, they have expertise in two different area, KV Kamath has expertise of developing a lending business model whiole Hitesh Sethi has expertise of implenting that lending business model through ditial and tech advancements. So, the Jio Financial Services Ltd is expected to be a hi tech lending business company in the financial segment." However, he maintained that the new Reliance entity would definitely foray into mutual funds, insurance and other financial segments.
On how Jio Financial Services Ltd would be different from other lenders available in the Indian financial system, Vaibhav Kaushik, Research Analyst at GCL Broking said, "Most of the peers of JFSL have a business model that relies heavily on leverages whereas if we look at the track record of RIL Chairman Mukesh Ambani, he don't like leverage. Hence, I am expecting that leverage-free business model getting implemented at JFSL as well. If that happens, then it would be a big threat to existing peers in long run, especially non banking financial companies (NBFCs). In fact, it would pose a big challenge to Bajaj Finance as well in the medium to long term."