MUMBAI: Shares of Jio Financial Services (JFS) received a big boost after Mukesh Ambani announced the entry of the company into insurance sector. JFS shares surged 5% on the stock exchanges on Tuesday, a day after the Reliance Industries’ Chairman told shareholders that the recently demerged entity of RIL will offer life, general, and health insurance products.
Shares closed at Rs 221.7 apiece, higher 4.7 percent, on the Bombay Stock Exchange (BSE) on Monday.
Addressing the 46th AGM of RIL on Monday, Mukesh Ambani said that JFS plans to enter the insurance in partnership with global players and the company will use predictive data analytics to create products, delivering to unique customer requirements. Although, the announcement triggered rally in JFS shares, the analysts said that not much information was revealed about expansion of company into the insurance sector.
“Nothing much was revealed about future strategy of Jio Financial Services foray into the insurance sector. The market was expecting some finer details about how Mukesh Ambani plans to grow in the insurance sector. However, there are reports about hiring going for insurance vertical,” an analyst with a brokerage firm told this newspaper. “The penetration of insurance product is very low and given the big size of market, there is vast opportunity for new players such as JFS. Insurance is a long term play, suited only for companies with deep pockets and long term vision and JFS has both- long term vision and capital,” he added.
The Indian insurance market consists of 55 players, with 26 life insurance providers and 31
general insurers, including five standalone health insurance providers. Total premiums written by Indian life insurers stood at `8.14 lakh crore, while those written by general insurers was at `2.65 lakh crore in FY23.
JFS was listed on the stock exchanges on August 21 after its demerger with Reliance Industries. The stock
was listed at `265 apiece on the BSE and `262 per share on the National Stock Exchange as compared to its discovered price of Rs261.85 apiece. Since its listing, JFS stock continued to hit lower circuit limits for consecutive sessions, on persistent selling from institutions who have to exit from the stock before it is removed from the indices.