Jio rises after listing to become India’s second most valuable company
For most of Wednesday morning, Jio Platforms looked set for a steady debut. It listed at ₹1,358, 21.36% above its ₹1,119 issue price, and then stayed around that level for nearly an hour.
In the afternoon, buyers came in strongly. By 3 pm the shares were above ₹1,410, and they closed at ₹1,417.50 on the NSE, 26.68% above the issue price. The day’s high was ₹1,424 and the low ₹1,356, which means the stock barely fell below its opening price.
At the closing price, Jio was worth more than ₹13 lakh crore. Only Reliance Industries, its parent, is worth more among Indian listed companies. Reuters put its value at about $137 billion at the close. Even at the listing price it was ahead of Bharti Airtel and HDFC Bank, making it India’s most valuable listed telecom company on its first day.
Rising shares
Jio’s free float, the shares actually available to buy, is under 3% of the company. Reliance and the global investors who bought into Jio in 2020 hold almost all the rest. So most demand chased very few shares.
The IPO itself also suggested this would happen. Qualified institutional buyers subscribed more than 70 times their portion. Many large funds received far fewer shares than they wanted, or none at all, and an index-heavy company of this size is one most large fund managers cannot leave out. Once trading began, the funds that missed out in the IPO bought in the open market.
There is one cautionary point. Motilal Oswal Financial Services started coverage of the stock with a target price of ₹1,350, below where it closed on its first day. Even supportive analysts think the first-day gains already price in a lot. Shares with a small free float can rise sharply, but they can fall just as fast once the initial demand fades.
Allottees who sold at the listing made about ₹2,868 on each lot of 12 shares. Those who held to the close made about ₹3,580.
Weak market
While Jio rose, the main indices lost ground. The Sensex fell 352.64 points to 73,246.03, and the Nifty 50 slipped 50.90 points to 22,698.85. IT stocks fell about 2%, with Infosys down more than 4% at one stage, and oil and gas stocks also dropped about 2%. Autos and pharma helped limit the decline. Smaller stocks again outperformed, with the Nifty Smallcap index up 0.9%. The rupee ended at 95.23 to the dollar.
One more IPO story from Wednesday. EAAA India Alternatives, the Edelweiss asset manager whose IPO drew only 0.05 times subscription on Monday, finished at 5.25 times. Institutional investors, as they often do, bid heavily on the last day, and the QIB portion was subscribed more than 13 times. Non-institutional investors bid 4.58 times and retail investors just over their allocation, at 1.03 times.
Jio, though, also attracted very strong demand from investors who were not allotted shares, which pushed the price higher after listing.
About The Author
