20th May 2024

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Business Industry and Financial

RIL AGM: Jio Financial shares snap 4-day losing streak, climb 4%

Jio Financial Services Ltd (JFS), whose shares were falling ever since they got listed on stock exchanges on August 22, recovered some group on hopes the 46th annual general meeting of Reliance Industries (RIL) would give cues on what the group was planning for the recently demerged financial services business. JFS holds 41.3 crore treasury shares of RIL, accounting for 6.1 per cent of its total share capital. A rise in shares of RIL, thus, are also positive for Jio Financial shares.

Shares of Jio Financial climbed 4.47 per cent to hit a high of Rs 221.75 on BSE. Shares of Reliance Industries gained half a per cent to hit a high of Rs 2,483. The JFS stock fell 1.69 per cent on Friday and 5 per cent each on the preceding three sessions. With Monday’s gain, the stock commanded a m-cap of Rs 1.40 lakh crore against Rs 1.68 lakh crore at the time of listing.

“RIL has a lot of plans on cards for value unlocking, which started from Jio Financial but initial reactions post JFS listing was not as per Street expectations. I believe Mukesh Ambani would be focusing more on the Jio Financial plan of action in coming days, which would give a road clear for further value unlocking of retail and Jio telecom ventures. We are neutral and investors should wait and watch for the AGM outcome before taking any action in RIL and Jio Financial,” Prashanth Tapse, Research Analyst Sr VP Research at Mehta Equities.

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For now, JFS intends to provide consumer facing financial services through its subsidiaries Reliance Retail Finance, Reliance Retail Insurance Broking, and Reliance Payment Solutions Limited and a joint venture, Jio Payments Bank (JPBL), Nomura India noted. JFS, it said, plans to primarily target key customer segments – unserved and underserved individuals and small-sized businesses in urban, semi-urban and rural India to offer comprehensive range of financial services.

On the other hand, CLSA cited media reports of Jio Financial Services Ltd (JFS) entering into life and general insurance space and said covering more lives could be a key focus area for the demerged entity. CLSA last week said insurance distribution may present an opportunity as it remains a fragmented segment with the presence of few large players only, adding that JFS already has a broking business in place with over 17 insurance partners, which may help JFS scale up faster.

InCred Equities recently said JFS can opt for wide variety of financial service business including the lending business, digital broking, insurance, mutual funds, payments, etc. It said it is not alarmed towards threat to existing players as loan origination through existing set of customers is important. Other factors such as cost of funds, appropriate risk assessment as well as prudent recovery mechanism also plays an important role for the success of a lender, it said.

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