Reliance demerger: Jio Financial shares valued at Rs 261.85 apiece

New Delhi: Jio Financial Services (JFSL), Mukesh Ambani’s new business, has astonished all the Reliance Industries (RIL) veterans today by rising to a share price of 261.85, which is much more than the brokerage predictions of 190.

During a special pre-open call auction session on Thursday at the stock exchanges, JFSL’s market value was determined at ₹261.85 per share on NSE. Following the effect of the demerger, RIL’s share price dropped to ₹2,580, but it rebounded by up to 2% after regular trading resumed at 10 a.m.

Before this day, RIL had announced that the cost of acquisition for Reliance Strategic Investments Limited, which is being renamed as JFSL, would be 4.68% post-merger. Considering the closing price of ₹2,840 on BSE on Wednesday, the acquisition cost comes to ₹133.

JFSL’s share price remained at the higher end of all brokerage estimates today, which ranged between ₹160 and ₹190 per share.

“This high price reflects the potential of Jio Financial’s capabilities in the market. Through extensive reach via other business verticals of RIL, such as Reliance Retail, the company has the ability to grow rapidly for many years to come,” said Dr. V.K. Vijaykumar, an analyst at Jio Financial.

After the demerger, JFSL’s total outstanding shares will be 635.32 crore.

Reliance share

How was Reliance JFSL’s price determined today?

NSE and BSE organized a special pre-open trading session from 9 a.m. to 9:45 a.m. During this session, the market value of the demerged unit was calculated separately. As part of the exercise, normal trading in Nifty 50 stocks was suspended until 10 a.m.

The price assigned to JFSL today is not stable but rather the difference between RIL’s closing price on Wednesday and the price obtained during today’s special pre-open session. On NSE, RIL’s previous session closed at ₹2,841.85, while it stood at ₹2,580 after the special session today. The difference is what JFSL is priced at, i.e., ₹261.85 per share.

On July 19, at the end of the trading day, all RIL shareholders will become eligible to receive JFSL shares in a 1:1 ratio. For example, if you hold 100 RIL shares, you’ll receive 100 JFSL shares.The announcement is anticipated to be made during Reliance’s forthcoming AGM. However, you won’t be able to trade in JFSL shares until the date of listing, which might occur in the following 2-3 months.

Effect of RIL’s merger on Nifty:

Reliance share price

Once included at the received fixed price, JFSL will be benchmarked alongside Nifty 50 and other major indices.

“JFSL will be removed from all NSE and BSE indices at the closing market value, which will be effective from listing date + 3 trading days. For instance, if JFSL gets listed on August 21, 2023, it will be removed from the indices on August 24, 2023,” said Nuwama Pagaria.

Reliance & Jio Financial Share Price After Demerger/Listing Date ? Video for you

Why the demerger?

The Ambani family decided to segregate JFSL as a separate entity due to the nature of financial services business, which requires specialized risk management, market dynamics, and growth initiatives distinct from the other core businesses of RIL, ranging from oil to chemicals, retail, and telecommunications.

The demerger will offer JFSL an opportunity to leverage RIL’s strengths for its growth and potentially unlock more value for shareholders. For shareholders, this is being seen as a value unlocking exercise.

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