JFS stock will be removed from Nifty and Sensex after the end of the third day of its listing, which is August 24. The exclusion date would, however, be deferred in certain cases. 
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JFS stock will be removed from Nifty and Sensex after the end of the third day of its listing, which is August 24. The exclusion date would, however, be deferred in certain cases. Shares of Jio Financial Services Ltd (JFS), the demerged financial business of Reliance Industries Ltd, got listed at Rs 265 apiece on BSE, a 1.18 per cent premium over their discovered price of Rs 261.85 apiece on July 20. The stock hit a high of Rs 278.20 and low of Rs 253.30 in the first five minutes of trade. On NSE, the scrip got listed at Rs 262 apiece. With this, the JFS commanded a market capitalisation of Rs 1,68,362.03 crore. The stock is admitted to dealings in the 'T' group securities on BSE.
JFS shares were credited to eligible shareholders of Reliance Industries (RIL) last week in the 1:1 ratio. The discovered share price for JFS based on the record date of the corporate event was much higher than the Street estimates of Rs 160-170 share price.
Brokerage CLSA noted that other than a stake in RIL, liquids worth $2.5 billion or Rs 33 a piece have been demerged into JFS. This can support a loan book of $13-15 billion, CLSA said. The foreign brokerage noted that even at the speed of the recent annual loan book additions of sector leader Bajaj Finance, JFS will take nearly three years to fully use up the amount. most lending financials trade below 3 times price to book ratio, except Bajaj Finance and Chola, which have return ratios of over 20 per cent. This, CLSA said, will need a PAT of over $500 million for core JFS.
"JFS will be taken out of key domestic benchmark indices after three days and this will force selling from passive funds. By virtue of owning RIL, CLSA's India focus portfolio has ownership of JFS but an exit will be pencilled in at the first 30 minutes weighted average price since it prefers banks," CLSA said.
A large core book reduces the need for JFS to sell its stake in Reliance Industries in the near term, CLSA said.
JFS shares will remain under BSE's T Group for the first 10 trading sessions. No intraday trading will be allowed.
The demerged financial services arm would unlock value for RIL shareholders and "give them an opportunity to be a part of a new growth platform," RIL recently said in its annual report.
The JFS stock will be removed from Nifty and Sensex after the end of the third day of its listing, which is August 24. The exclusion date would, however, be deferred in certain scenarios. As per Abhilash Pagaria of Nuvama Institutional Equities, there could be passive outflows on the counter.
"Assuming the hypothetical price scenario for JFS on its Trading (T) + third day of listing - at Rs 261.8 Share - Nifty index passive trackers could sell around 9 crore shares, which is equivalent to approximately $290 million. Alongside Sensex index trackers could sell 5.5 crore shares, which is equivalent to $175 million," Pagaria said.
This is calculated at the current free float and assuming JFS weightages of less than 1 per cent in Nifty and around 1 per cent in Sensex.
"In case, during the first two days of these three days, the spun-off entity hits the price band on both days, then the exclusion date shall be deferred by another three days. After observing two consecutive days of the spun-off entity not hitting the price band, the spun-off entity shall be removed after the third trading day of such observation. If on such a third day spun-off entity again hits the price band, the exclusion of such stock shall not be deferred any more," Pagaria Nuvama noted.
To recall, July 20 was the record date for the demerger of Reliance Industries' (RIL) demerged financial services business. The discovered price of 261.85 was based on the difference between RIL's close of Rs 2,841.85 on July 19 and RIL's ex-demerger price of Rs 2,580 in the pre-open session. Shares of JFS were credited to eligible Reliance Industries shareholders in 1:1 ratio last week.
Meanwhile, Jio Financial is set to be delisted from FTSE Indices, marked at zero value, on August 21. To simplify, FTSE passive trackers will assign zero value to JFS shares, gradually removing them post Jio's trading initiation. MSCI Index will uphold JFS shares.
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