Jio Financial Services listing: Know about valuation, capital gains tax and more

Raising capital to expand its offerings should not be an issue for JFS, given the strong track record of its promoters

Jio Financial Services, which was known as Reliance Strategic Investments before being hived off, made its debut in the Dalal Street today. While the stock's discovered price was Rs 261.85, it listed at Rs 262 on the NSE and Rs 265 on the BSE.

Investors have been allotted one share of JFS for every one share of Reliance Industries held by them. After spending a month as a dummy stock following demerger from the parent, the JFS shares have finally become tradeable. However, the scrip will be in trade-to-trade segment for the next 10 trading days.

Here's a look at what that means and all that you need to know about the stock:

Trade-to-trade segment 

In this segment, shares can be traded only for compulsory delivery basis. Intraday trades are not possible.

If an investor buys shares of JFS and tries to sell it on the same day, or before the shares are credited to the demat account, then the order will be rejected. The stock will be in this segment for 10 days.

Symbol

The symbol for Jio Financial Services stock is JIOFIN.

Market capitalization 

With over Rs 1.66 lakh crore of market capitalisation, Jio Financial Services is the second largest listed NBFC in India. Its market cap is greater than that of several Nifty 50 biggies like Britannia, Hero MotoCorp and Grasim Industries. It also has a higher market cap than IndusInd Bank, SBI Life and HDFC Life.

Treasury stock 

Jio Financial Services holds a 6.1 percent stake in Reliance Industries, which is a result of transfer of treasury shares.

Treasury stock is shares in a company that the issuer has reacquired. RIL has about 41.28 crore such shares originating from past restructuring of Reliance Petroleum.

Net worth 

As per data compiled by foreign broking firm Jefferies, JFS had a net worth of Rs 28,000 crore (FY22). This includes 6.1 percent stake in Reliance Industries. Excluding the cost of that stake, JFS' core net worth may be about Rs 14,000 crore.

Removal from Nifty and Sensex 

Jio Financial shall be removed from the two benchmark indices after the end of the day on the third day of its listing. Basically, exclusion will happen on August 24, 2023.

Due to this, Nifty 50 index passive trackers could sell around 9 crore JFS shares and Sensex index trackers could sell 5.5 crore shares, as per Nuvama Alternative & Quant Research.

MSCI and FTSE 

JFS will continue to remain in the indices of FTSE Russell, and will also be added to the MSCI Global Standard Index. The addition to the MSCI Global Index will come into effect from August 23.

Earlier, FTSE had decided to drop the stock from its indices as its trading had not commenced within 20 business days of demerger. This decision was reversed soon after RIL announced August 21 as the listing date.

Tax calculation 

Before the demerger, the company apportioned 95.32 percent as RIL's cost of acquisition and 4.68 percent for Jio Financial Services. This will help investors calculate their capital gains tax at the time of sale of shares.

This means an investor who bought RIL shares on July 19, a day before the demerger, is deemed to have paid Rs 133 (or, 4.68 percent of Rs 2,853 closing price) for Jio Financial Services.

Management pedigree 

While veteran banker KV Kamath will be the non-executive chairman at Jio Financial Services, Isha Ambani has been appointed as a non-executive director on the board of JFS. Hitesh Sethia, a former ICICI executive, will take on the role of the new CEO and MD.

Also, Charanjit Singh Attra, who recently resigned as Chief Financial Officer of the State Bank of India (SBI), has taken up the position of Chief Operating Officer at Jio Financial Services.

 What's in store?

JFS, through its operating subsidiaries and joint ventures, will offer a broad range of financial service solutions, addressing the needs of both consumers and merchants, according to the company. It will operate primarily in the NBFC market and credit market segment, and has strategic plans to expand its operations into insurance, digital payment, and asset management verticals.

Last month, JFS had announced its tie-up with Blackrock, the world’s largest asset manager, to float a mutual fund company. Together, the partnership will introduce a new player to the India market targeting initial investment of $300 million.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.