Rs 37,000 Crore Wealth Lost, 22% Drop In 5 Days: Can RIL's AGM Boost Jio Financial Services Stock On Monday?

Jio Financial Services, the newly listed stock, could not find any support from bulls in the trading week from August 21 to 25. On Friday, the share price was on a whole different roller coaster ride, from hitting fresh 52-week lows to rising by nearly 5% but ending up in deep red. This was because the stock's exit from S&P BSE Indices was delayed further to September 1 due to its back-to-back lower circuits. In its first week of trading, Jio Financial stock has lost around Rs 37,000 crore of market wealth since listing and declined by more than 22.5%. The Reliance Industries 46th AGM is likely to allow further clarity in navigating positions in Jio Financial Services.

On Friday, the stock ended at Rs 212.25 apiece, down by 1.69%. The stock touched a 5% lower circuit of Rs 205.15 apiece, which was also the fresh record low of the stock. The stock gained nearly 5% with an intraday high of Rs 225 apiece before pulling back in closing hours.

At the August 25th closing price, Jio Financial's market cap stood at over Rs 1.34 lakh crore, losing around Rs 32,000 crore of valuation since listing. However, at the new record lows, the stock's wealth erosion is at a much higher scale.

In a notification on Friday, BSE announced that "since the stock has hit lower circuit limit for 2 consecutive days i.e., Thursday, August 24, 2023, and Friday, August 25, 2023, the removal of JFSL from all the S&P BSE Indices will be postponed by another 3 days. JFSL will now be removed from all the S&P BSE Indices effective before the open of trading on Friday, September 01, 2023."

Earlier, Jio Financial was expected to exit from the indices on August 29.

Additionally, BSE said, that should JFSL not hit the lower circuit limit on either of the next 2 days but hit the lower circuit limit on the 3rd day, the removal of JFSL from all the S&P BSE Indices will be postponed.

Jio Financial Services listed on August 21 at Rs 265 apiece, up by 1.20% from its fixed price of Rs 261.85 apiece in the pre-market price discovery session which was held last month.

From its listing price to its new 52-week low of Rs 205.15 apiece, Jio Financial shares have nosedived over 22.5% on BSE in five trading sessions. On the intraday day on Friday, the company's market dropped to Rs 1.29 lakh crore at a 1-year low price level, compared to the market cap of Rs 1.66 lakh crore at the listing price on August 21, hence, leading to an erosion of Rs 37,000 crore of wealth since listing.

It is said that Jio Financial stock will see stability once it reaches fair value.

Shreyansh Shah, Research Analyst, StoxBox said, "As expected, the fair value of the Jio Financial Services stock is likely around Rs 200 a piece, based on 2x multiple to networth and 30% holdco discount."

Reliance Industries (RIL) is scheduled to hold its 46th Annual General Meeting (Post-IPO) on Monday. Experts believe Jio Financial stock will see a major move following the AGM, as positive announcements are expected.

Further, Shah added, "We feel that there seems to be some value buying by investors at these levels. Also, in the upcoming AGM which is scheduled for Monday, we believe some rub-off effect is seen on the stock's price on optimism of some investor-friendly announcements. As the company has partnered with BlackRock for the Indian asset management services and will be chaired by veteran KV Kamath, the market is optimistic that it will potentially create shareholder value and a further roadmap is expected to be announced in the upcoming AGM of Reliance Industries Ltd. on Monday."

The recently demerged financial company from Reliance Industries was placed under BSE's 'T' group of securities which represents Securities that are settled on a trade-to-trade basis as a surveillance measure.

Jio Financial stock will be in the Trade-for-Trade segment for 10 trading days. That means they are not offered in intraday trading but instead on a delivery basis currently.

Also, Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "The stock will start trading in the rolling settlement from September onwards." He added, "The selling pressure on the stock comes from institutions who have to exit from the stock before it is removed from the indices. Further weakness in the stock will open up opportunities for long-term retail investors to buy the stock."

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