Shares of Reliance Industries (RIL) on Thursday traded in a special session to determine the share value of its demerged financial services unit, Reliance Strategic Investment Ltd (to be renamed as Jio Financial Services Ltd). The discovered price for Jio Financial Services came at Rs 261.85. The derived price was the difference between RIL's previous close (Rs 2,841.85) and the price discovered, at Rs 2,580, during the special pre-open session today.
"This derived price of Jio Financial will be considered on a daily basis for Nifty index value computation until it gets listed on the bourses. Once Jio Financial shares get listed on exchanges, the stock will remain as the 51st stock in Nifty 50 index for three days. This will help volatility to settle in and let investors adjust their portfolios," Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities.
On the earnings front, Reliance Strategic or Jio Financial reported a net profit after tax of Rs 145 crore for April-June (Q1 FY23) based on revenue of Rs 215 crore.
Here are a few key answers sought by RIL shareholders:
* Listing date? "There is no concrete listing day yet and it may take few weeks to get all the listing approvals. Jio Financial being carved out from one of the biggest giants so we expect the listing process should be fast tracked and quite likely it may be listed in a month's time (or even lesser)," Nuvama stated.
Although, it did outline two particular instances where the listing process took more than a month's time. "Piramal Pharma got demerged from Piramal Enterprises and post record date it took almost 45 days for the listing. And, NMDC Steel got demerged from NMDC Ltd and post record date it took almost 4 months for the listing," Nuvama mentioned.
* Jio Financial to be introduced in derivatives automatically? "No. As per the current methodology, a stock needs to have at least six-month trading history to even qualify for derivative inclusion. After fulfilling all the quantitative qualification criteria for the derivative inclusion, the stock will need SEBI approval (which is quite subjective)," the domestic brokerage said.
* RIL stockholders to get Jio Financial's shares in 1:1 ratio? Yes, stockholders would get one Jio Financial share for each Reliance share they hold.
Jio Financial's derived stock price (Rs 261.85) is higher than analysts' estimate of Rs 160 to Rs 190. "This high price is a reflection of the market's assessment of the company's potential. The wide reach of Jio Financial, through RIL's other business segments like Reliance Retail, has the potential to grow the company at a fast pace for many years to come. The market is discounting this potential," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
* Valuation? Currently, the non-bank financial company is valued at around $20 billion, whereas the oil-to-retail conglomerate Reliance's valuation came at $233 billion. Jio Financial would be included in major domestic indices but it won't trade until it is listed.
"Following the demerger, Jio Financial is now India's fifth-largest financier, set to fight directly with major NBFC and fintech businesses. As India's financial services sector grows, digitalisation will be critical in growing the addressable market, particularly in merchant and retail loans," said Prashanth Tapse, Senior VP Research Analyst at Mehta Equities.
Meanwhile, trading ex-demerger, Reliance shares today rose over 1 per cent to trade at Rs 2,619.50 in late deals.
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Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
