Shares of Jio Financial Services (JFS) hit lower circuit limits for the second straight session amid concerns about passive outflows. Reliance Industries’ spin-off financial services business saw its shares locked in at the 5% lower limit of Rs 239.20 on BSE. They are down 5% from their spot price of Rs 261.85 in the previous session. Analysts said the counter’s weakness was driven by institutional selling and the counter’s outlook was positive.
“JFS’s valuation is based on expectations around its future growth potential and the 6.1% stake it owns in RIL. The future growth prospects of JFS are indeed very bright because of the company’s outstanding publicity. The company is able to scale up its business strongly thanks to its extensive relationships with consumers and merchants.VK Vijayakumar, Investment Strategy Manager at Geojit Financial Services, said: “But institutional selling. will drag the stock price in the near future. Since the stock is in the T-segment, institutional selling is driving the price down.”
Santosh Meena, Head of Research at Swastika Investmart, said the mutual fund adjustment could trigger some outflows.
“Although the short-term outlook is uncertain due to uncertain business direction and profitability, the long-term outlook remains optimistic, supported by its strong roots and extensive network—a The industry’s optimistic outlook reinforces this view. Therefore, long-term investors should hold on to Jio Financial Services shares, while short-term investors are advised to hold onto shares of Jio Financial Services. can stay away. Look forward to potential insights into Jio Financial Services’ future plans during the upcoming Reliance AGM,” said Meena.
There are concerns about passive cash flow over the counter as stocks bounce off key stock indexes. Nuvama Institutional Equities estimates that prior to listing, exiting Nifty stock on the third day of listing could cause $290 million in capital outflows while exiting Sensex could cause 175 million outflows. million dollars.
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“In the event that, during the first two of these three days, the detached unit reaches the price on both days, the exclusion date will be deferred for another three days. After observing two consecutive days of the application taste separated.” does not touch the price range, the detached entity will be removed after the third trading day from that observation date,” said Abhilash Pagaria of Nuvama.
CLSA notes that in addition to RIL’s shares, liquidations worth $2.5 billion or Rs 33 a share have been merged into JFS. This could support a loan book worth $13-15 billion, CLSA says. The offshore broker noted that even with the recent annual rate of loan book replenishment by industry leader Bajaj Finance, it would take JFS nearly three years to use up the funds. most lending finance companies are trading below 3x price to book, except Bajaj Finance and Cholamandalam, which have a return rate of over 20%. CLSA says this will require a PAT of more than $500 million for the core JFS.
G Chokkalingam, Founder of Equinomics Research said that existing investors shouldn’t worry much as the stock looks reasonably priced. He advises new investors to buy shares staggered and feels a target of Rs 300 on the stock is possible.
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“One shouldn’t worry at all. One should rely on valuation. The medium to long-term outlook is very good for JFS. Investors who are holding it can hold the stock. Those who want to buy it can buy even today foreigners must definitely sell stocks today to recalibrate their portfolio I can’t recall a single stock from the stable Reliance group that made Street disappointed in the last few decades with a treasury value of Rs 1 lakh crore, even if we put it at 1.5x Chokkalingam said: .
Ravi Singhal, CEO of GCL Broking said, JFS can trade around Rs 170 to Rs 220 in the short term according to the business valuation and discount of the parent company. Because the company holds treasury shares. “They will be marketed and help JFS generate cash and increase its book value in the long run,” he said.
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