Ambani’s dream of financial company , going to be true with Jio Financial Services Ltd. India’s biggest company – Reliance group recently announced demerger of it’s financial company Reliance Strategic Investment named “Jio Financial Services JFS”. In below article we will seeing the everything about this demerger.
What would be cost of share ?
The market have responded very well and assigned a price of 261.85 per share. however it’s not the final price it’s just a guess but let’s see when it’s listed. If you already have shares of Reliance industries then for every one share of RIL you will get 1 share of Jio Financial services. But Financial analysts have said the value of JFS should be around 160-190.
Jio Financial services will take care of Reliance 6 companies named – Reliance Industries Investments and Holdings (RIIHL), Reliance Payment solutions , Jio Payments bank , Reliance Retail Finance , Jio Information Aggregator services and Retail Insurance Broking.
As Reliace have huge collection of customer data so initially the main focus of the JFS would be retail lending and merchant lending. Alone Jio have around 44 crore customer data. on the other have Retails business of reliance have generated around 25 crore of transaction in previous quarter. The collection of data played and significant role which have given the report whom to lend and limit of lending.
Instead of creating new company Ambani demerge it’s own company and renamed it as Jio Financial Services. May be one of reason is old company is already backed and a lot of investments which no need to bring in new one. There might be others reason as well but we are not sure currently.
Competitors of Jio Financial services
As per market research Jio Financial services would be the 5th largest financial service provider in terms of capitals. The direct impact would be with Bajaj Finance and Paytm. Currently Bajaj finance have net worth of around 44,000 crore which is largest NBFC on the other hand Jio financial service have net worth of 1,50,000 crore. JFS have 1,10,000 crore shares of Reliance Industries remaining 40,000 is the net worth of JFS.
Sumeet Bagadia, Executive Director at Choice Broking said, “This is a strong listing of JFSL shares because as per RIL’s last closing price of ₹2,853 on NSE, the implied value of the ex-demerged entity is ₹2,707 and that of RSIL is ₹133.”
Currently all the investors of JFS should know that they cannot sell the JFS shares now. The JFS will have a same price where RIL having presence. Company have not mentioned about allotment and listing date. May be once JFS is listed share price might be vary from 261.
Talking about the future of the JFS – Ambani said that it’s going to be technology company which will drive the financial products throughput the nation. also he said – It is “uniquely positioned” to capture opportunities and bring “millions of Indians into formal financial institutions”. Also the product of JFS will try to reach to population which are out of lending range.
Ambani already have large no. of customer base which was an magnificent job by JIO telecommunications. By providing cheap data and free calling facility Jio accumulated a large customer base. Ambani is planning to bring another revolution in financial sector , may be by proving cheap credits or some other products to it’s wide range of customers like he did in Jio. if JFS got succeeded then it would be problem for other financial companies.
In 2017 Ambani once said – “Data is going to be new oil”. With help of Jio this new oil will help Ambani to rule on the other business.
please read another article on merger of HDFC LTD and HDFC Bank.