LIC Picked Up 6.66% Stake In Jio Financial Services: What Valuation Says?

The insurance behemoth Life Insurance Corporation of India (LIC) revealed on Tuesday that it acquired a 6.66% stake in Jio Financial Services Ltd. (JFSL). According to the company's announcement dated July 19, the cost of holding JFSL shares through the demerger of the non-banking financial institution is 4.68% of the pre-demerged cost of Reliance Industries, according to an exchange filing.

As of June 30, 2023, LIC held a 6.49% stake in Reliance Industries. Jio Financial Services Limited (JFSL), formerly known as Reliance Strategic Investments Limited, had its stock market debut on August 21.

After a lacklustre debut on Monday, Jio Financial Services' share price stayed at a 5% lower circuit for the second straight session on Tuesday. JFSL shares were priced at Rs 265 per share on the BSE and Rs 262 per share on the NSE on Monday Jio Financial Services' share price was Rs 236.45 at 11:43 a.m., while LIC's share price was Rs 665.35 on Tuesday.

Life Insurance Corporation of India disclosed in its most recent market filing, dated August 18, 2023, that it has decreased its shareholding in TIL Limited. The LIC's stake in "TIL LTD." has been reduced, with the number of equity shares falling from 8,10,038 to 5,96,195. According to LIC India, this modification reduces its stake in TIL from 8.076 percent to 5.944 percent of the company's total paid-up capital.

Commenting on the valuation of Jio Financial Services, AR Ramachandran from Tips2trades said, "Despite LIC acquiring a 6.66% stake in Jio Financial Services, Jio Financial continues to remain extremely overvalued as compared to its peers. A daily close below 240 could lead to targets of 227.65-214 in the near term."

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