Shares of Jio Financial Services Ltd have made headlines today as they plunged below the psychologically significant level of Rs 200 for the first time ever, closing at Rs 198.60 on the Bombay Stock Exchange. This decline of 4.3 percent marks the scrip's all-time low, reflecting continuous struggles since the company’s market entry.
Since its listing on the stock markets at Rs 265 per share in August 2023, Jio Financial has seen its stock price tumble drastically. Over the past month alone, the company has experienced almost 11 percent reduction, equalling 10.99 percent. Comparatively, the stock has shrunk 36.18 percent over three months and 32.64 percent year-on-year, starkly contrasting with the BSE Sensex index, which gained 1.8 percent over the same timeframe.
The situation is concerning for investors as market analysts observe technical indicators indicating bearish sentiments. According to Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, "The stock's technical parameters submerged in oversold terrain. With no sign of respite, it is in the formation of lower lows – lower highs, indicating inherent weakness." This analysis points to upcoming hurdles investors must navigate.
Support levels are forecasted to be between Rs 190 and Rs 184, with resistance expected near the Rs 220-235 range as per various experts. Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi, suggested, "A decisive move above Rs 210 level may trigger a potential upside of Rs 225,” posing yet another point of tension for traders.
The reports on earnings showcase Jio Financial's mixed performance. For the December quarter, the company recorded a marginal rise of only 0.32 percent with net profits hitting Rs 294.78 crore, up from Rs 293.82 crore year-on-year. Revenue from operations, meanwhile, lifted 5.98 percent, reaching Rs 438.35 crore from Rs 413.61 crore.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, advised caution for investors with shorter timelines: "Those with a medium- to short-term view should not hurry and should avoid these NBFC stocks at current levels." This sentiment resonates throughout the trading floor, as investors remain wary of the erratic nature of recent performances.
Market analysts elaborate on the factors contributing to this volatility. Despite the company’s efforts to expand its financial services business, including asset management and stock broking which involve pivotal partnerships with international firms like BlackRock, growth remains slow. Analysts liken Jio Financial’s performance to walking through murky waters...
While the company is undeniably key to Mukesh Ambani’s Reliance Group, the value is under scrutiny. Jio Financial Services has entered various markets, from mutual funds to personal loans; yet, they are still grappling with the growth and validate strategies necessary for predicting earnings with precision. Analysts noted, "While the company’s long-term prospects are promising, the volatility in earnings and the uncertain near-term outlook warrant a more cautious approach," as put by analysts at KR Choksey.
The stock's price-to-equity (P/E) ratio stands currently at 249.19, paired with a price-to-book (P/B) value of 5.32, indicating how much investors are willing to pay for every rupee of earnings. Earnings per share (EPS) currently sit at 0.83 with return on equity (RoE) at 2.13. Such metrics have stirred discussions on the stock's standing among market stakeholders.
Reflecting on the holdings, Mukesh Ambani and his family members, including Neeta Ambani, Isha Ambani, Akash Ambani, and Anant Ambani, together command just over 0.64 percent of the company, whereas the wider promoter group holds around 47.12 percent stake. Public shareholders are not far behind, with variations such as mutual funds and others holding significant portions of shares.
Despite these engagement efforts, the marketplace’s apprehensive tone adds pressure not just to Jio Financial but to the broader sector it operates within. Experts contend selling pressures may exacerbate the downward spiral if positive changes aren’t instituted rapidly. AR Ramachandran reinforced this perspective, stating, "Jio Financial is bearish but also oversold on daily charts with next support at Rs 184. Investors should buy only if there is a daily close above the resistance of Rs 206, which could lead to an upside target of Rs 237." Analysts predict cautious behavior until substantial recovery signals emerge.
The uncertainty surrounding Jio Financial's future resonates broadly; stakeholders are eager to see what measures will be taken to restore confidence and possibly reclaim their standing. While the financial performance yielded promising signs, the immediate outlook still demands careful navigation among bearish trends. For now, market participants watch closely to gauge when stability may return to Jio Financial's trading environment.