Jio Financial Services to Demerge from Reliance Industries

Reliance Industries Limited, the largest private sector corporation in India and a Fortune 500 company, has diversified its operations from textiles and polyester to encompass energy, materials, retail, entertainment, and digital services. The company’s extensive portfolio of products and services has a wide-reaching impact on the daily lives of people across different economic and social backgrounds in India. Founded by Dhirubhai Ambani, Reliance is currently led by his son, Mukesh Dhirubhai Ambani. 

Reliance Industries witnessed a surge over 4% in its share price, reaching Rs 2,755, following the news of Reliance Retail’s decision to reduce its equity share capital and restrict it to the promoters and holding company. Shareholders of Reliance Retail, an unlisted entity, will be offered Rs 1,362 per share as part of this reduction.  

Simultaneously, Reliance Industries has announced the demerger of its financial services unit, Reliance Strategic Investments, which will be renamed Jio Financial Services (JFSL). JFSL will issue one fully paid-up equity share of Reliance Strategic Investments, valued at Rs 10 each, for every share of Reliance Industries held by eligible equity shareholders as of the record date set on July 20.  

This move holds potential for value unlocking in RIL, with the book value per share of JFSL estimated to be around Rs 190. Reliance industries pulled the benchmark indices upwards by contributing about 80 points as the company currently boasts a market capitalization exceeding Rs 18.44 lakh crore. 

The company had delivered returns of 13.4% over the past year and returns of 46% over the past 3 years. 

On Monday, shares of the company surged by more than 4% and traded on a new 52- week high of Rs 2,755. Additionally, the scrip had a spurt in volume by more than 3.38 times. 

Investors should keep a close eye on this buzzing stock.