Jio Financial Services Impact: Reliance Shares Hit Lifetime High

RIL’s shares reached an intraday high of ₹2756 apiece on the NSE, surpassing its previous all-time high of ₹2755 per share. The market capitalization of Reliance Industries also surpassed ₹18 lakh crore.

Reliance Industries Ltd (RIL) witnessed strong buying interest in the Indian stock market. All these happened after the announcement of the demerger of Reliance’s financial services subsidiary.

This subsidiary is known as ‘Reliance Strategic Investments’, which will be later renamed as ‘Jio Financial Services.’

The demerger of Jio Financial Services was announced with a record date set for July 20, 2023. This follows the approval of the scheme by the Hon’ble National Company Law Tribunal, Mumbai Bench.

According to the scheme, Reliance Strategic Investments Limited (RSIL) will issue one fully paid-up equity share of RSIL, with a face value of ₹10 each, for every fully paid-up equity share of ₹10 each of the Resulting Company to the eligible shareholders.

While the official Jio Financial Services share price is yet to be announced, global brokerages Jefferies and JP Morgan have estimated it to be around ₹179 and ₹189 per share, respectively.

The listing date for Jio Financial Services is expected to be by the end of August 2023, as per Avinash Gorakshkar, Head of Research at Profitmart Securities. This timeline allows for around one to one and a half months after the demerger record date.

The announcement of the demerger and the subsequent renaming of Reliance Strategic Investments to Jio Financial Services propelled RIL’s shares to a 52-week high of ₹2755.

This decision to demerge the financial services arm of Reliance Industries is expected to unlock value for the company’s shareholders.

Under the plan, RIL shareholders will receive one share of Jio Financial for every share they own of RIL.

Reliance Retail, a subsidiary of RIL and India’s largest retailer, announced a reduction in its equity share capital.

The company’s board approved the cancellation of all shares, except those owned by its holding company, Reliance Retail Ventures. The cancellation will occur at a price of ₹1,362 per share based on an independent valuation.

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The Indian market will witness the overall impact of this demerger soon. The company has decided to demerge its financial services arm ‘Jio Financial Services’ as well as there will be reduction of Reliance Retail’s equity share capital.