Reliance Industries’ demerged unit, Jio Financial Services, gains momentum with higher-than-expected valuation

Reliance Industries’ demerged unit, Jio Financial Services, gains momentum with higher-than-expected valuation

In a surprising turn of events, Jio Financial Services (JFS), the demerged financial services unit of Reliance Industries, established its share price at a significantly higher-than-expected Rs 261.85 during a special trading session for the parent company’s stock on Thursday. This valuation marks a crucial milestone in Reliance’s strategic move to expand its presence in the financial services sector.

Analysts’ estimates for the share price of Reliance Strategic Investments, soon to be renamed Jio Financial Services, hovered between Rs 160 and Rs 190 per share. However, JFS surpassed these projections, impressing investors and market observers alike. Reliance shareholders, in turn, are poised to receive one share of Jio Financial Services for each share of Reliance they hold. The demerger serves as Reliance’s strategic approach to tap into the financial services arena, capitalizing on its existing non-bank financial company license.

Axis Securities had valued Jio Financial Services at the treasury stock valuation of Rs 1,08,597 crore (1x RIL’s treasury stock valuation). The company’s total outstanding shares stand at Rs 676.6 crore, implying each share’s valuation would be Rs 160/share.

The anticipation surrounding the demerger had a palpable impact on Reliance’s stock performance. Leading up to Wednesday, the company’s shares surged by 8% since the announcement of the record date for the demerger on July 8, a move that was first unveiled in October last year. As a testament to Reliance’s robust performance, the stock was trading approximately 1.4% higher at 10:16 a.m. after the special session, outpacing the broader market’s rise with an impressive 11.6% increase so far this year, compared to a 9.5% rise in the Nifty 50.

(With agency inputs.)