Reliance Industries (RIL) shares extended their winning streak for the third straight session on Wednesday, with the stock price hitting a fresh 52-week high as investors rushed to buy the stock amid hope it would unlock value for shareholders post demerger of Jio Financial Services. The market capitalistion (m-cap) of the country’s most valued firm crossed ₹19 lakh crore as the blue chip stock climbed nearly 4% in the last three days. Analysts at Axis Securities have recommended investors to ‘Buy’ RIL shares before the record date of demerger (July 20), as they believe it to be a more economical way to buy Jio Financial Services which will be temporarily added to the indices.
“We recommend investors to BUY Reliance Industries before the record date i.e. 20th Jul’23 and believe it to be a more economical way to buy Jio Financial Services which is likely to list at Rs.160/share (1x RIL’s treasury stock value),” says Axis Securities.
The brokerage, in a report, says that post demerger, the value of Jio Financial Services at the treasury stock valuation would be around ₹1,08,597 crore (1x RIL’s treasury stock valuation). “The company’s total outstanding shares stand at 676.6 crore, implying each share’s valuation would be ₹160 per share.”
“We value JFSL at treasury stock valuation as the business model of the company is yet to be announced. Even if the entire allocation is not directed towards JFSL, the company might be able to leverage the same for regulatory funds,” it added.
RIL shares opened a tad higher at ₹2,832 against Tuesday’s closing level of ₹2,822.40 on the BSE. In the first two hours of trade so far, the Sensex heavyweight gained as much as 0.8% to ₹2,845, while the m-cap rose to ₹19.10 lakh crore. The stock has risen 30% in the last four months after hitting a 52-week low of ₹2,180 on March 20, 2023.
Billionaire Mukesh Ambani-led RIL shares have witnessed strong rally in the recent past after the conglomerate announced the demerger of its financial services arm Reliance Strategic Investments (RSIL), which would be later renamed Jio Financial Services Limited (JFSL). The oil-to-telecom conglomerate fixed July 20 as the record date to determine eligible shareholders for the allotment of shares of the demerged entity. The ratio for demerger is set at 1:1, which means for every share of RIL held before the record date, the company will award 1 share of JFSL. With RIL’s financial business moving to JFSL, it will own a 6.1% stake in Reliance Industries.
The National Stock Exchange (NSE) has announced that it will conduct a special pre-open session in RIL shares on July 20, on account of the demerger of JFSL, which will be temporarily added to the Nifty50 index. JFSL will also join 18 other NSE indices such Nifty 100, Nifty 200, Nifty 500, Nifty Energy, and Nifty Oil & Gas until it gets listed on the exchanges. The JFSL is expected to list on the BSE and NSE in the next 2-3 months.
In April this year, NSE Indices Ltd revised the norms for handling corporate actions such as mergers and demergers in index stocks. Under the new methodology, the demerged company will be temporarily added to the Nifty index if Special Pre Open Session (SPOS) is conducted by the exchange.
Reliance has been building a vibrant financial services platform to create value for every stakeholder. JFSL focuses on the NBFC market and credit market segment. It further plans to foray into insurance, digital payment, and asset management verticals. Isha Ambani has been appointed the non-executive director on the board of JFSL, whereas Hitesh Sethia (ex-ICICI executive) will be the new CEO, MD.
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