RIL shares at Rs 3,000? What Bernstein says on JFS, unlocking opportunities
Bernstein said RIL is on the path of unlocking across business segments, evident from the recent demerger of Jio Financial Services (JFS), buyout of minorities investor in Reliance Retail and the stabilising of telecom capex.
- Aug 2, 2023,
- Updated Aug 2, 2023 3:08 PM IST
Bernstein has revised its target price for Reliance Industries Ltd (RIL) to Rs 3,000 from Rs 3,040 earlier, factoring in the demerger of Jio Financial Services (JFS). Bernstein said RIL is on the path of unlocking across business segments, evident from the recent demerger of Jio Financial Services (JFS), buyout of minorities investor in Reliance Retail and the stabilising of telecom capex.
RIL has repositioned the company to focus on four key growth pillars, it said. RIL is expanding oil-to-chemical (O2C) business into downstream chemicals with investments by strategic partners. It is building up Reliance Retail (18,000 stores) and scaling omnichannel (e-commerce mix at 18 per cent). The oil-to-telecom major is expanding Jio Platforms (currently 45 crore subscribers ) with 5G rollout. Besides, RIL continues to scale up in new energy by accelerating investments in energy transition, Bernstein said.
Bernstein noted that Jio Platforms has 33 per cent global investors and Reliance Retail has 10 per cent investors. The company has not diluted stake in the new energy segment, it noted.
In a note on August 1, Bernstein said: "Reliance has been unlocking value across segments. RIL bought out minority shareholders in Reliance Retail with a share buyback. Recent news article reported that a new investor is expected to buy 1 per cent stake in Reliance Retail at $100 billion valuation. RRVL(hold co) had sold stake sales of 10 per cent to financial investors in 2020. JPL (Jio platforms) has 33 per cent global investors and could be on IPO route in short/medium term," Bernstein said.
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Bernstein on JFS
It noted that RIL has funded JFS with a capital of $2.5 billion in addition to the 6.1 per cent stake in Reliance Industries. JFS, which demerged from Reliance Industries, has/will have licences in broking, asset management, NBFC, insurance, and mutual funds. The financial services segment consists of management and deployment of identified resources of the company to various activities, it noted adding that the consolidated gross revenue for financial services for FY23 stood at about Rs 890 crore, with Ebidta margins at 56.8 per cent.
The JV with Blackrock will give JFS access to BlackRock's expertise in investments and risk management, as well as its risk management systems such as Aladdin. Blackrock had earlier partnered with DSP, and exited the country in 2018.
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Bernstein has revised its target price for Reliance Industries Ltd (RIL) to Rs 3,000 from Rs 3,040 earlier, factoring in the demerger of Jio Financial Services (JFS). Bernstein said RIL is on the path of unlocking across business segments, evident from the recent demerger of Jio Financial Services (JFS), buyout of minorities investor in Reliance Retail and the stabilising of telecom capex.
RIL has repositioned the company to focus on four key growth pillars, it said. RIL is expanding oil-to-chemical (O2C) business into downstream chemicals with investments by strategic partners. It is building up Reliance Retail (18,000 stores) and scaling omnichannel (e-commerce mix at 18 per cent). The oil-to-telecom major is expanding Jio Platforms (currently 45 crore subscribers ) with 5G rollout. Besides, RIL continues to scale up in new energy by accelerating investments in energy transition, Bernstein said.
Bernstein noted that Jio Platforms has 33 per cent global investors and Reliance Retail has 10 per cent investors. The company has not diluted stake in the new energy segment, it noted.
In a note on August 1, Bernstein said: "Reliance has been unlocking value across segments. RIL bought out minority shareholders in Reliance Retail with a share buyback. Recent news article reported that a new investor is expected to buy 1 per cent stake in Reliance Retail at $100 billion valuation. RRVL(hold co) had sold stake sales of 10 per cent to financial investors in 2020. JPL (Jio platforms) has 33 per cent global investors and could be on IPO route in short/medium term," Bernstein said.
Also read: Hot stocks on August 2, 2023: IRFC, Hawkins Cookers, Reliance Power, Sula Vineyards and more
Bernstein on JFS
It noted that RIL has funded JFS with a capital of $2.5 billion in addition to the 6.1 per cent stake in Reliance Industries. JFS, which demerged from Reliance Industries, has/will have licences in broking, asset management, NBFC, insurance, and mutual funds. The financial services segment consists of management and deployment of identified resources of the company to various activities, it noted adding that the consolidated gross revenue for financial services for FY23 stood at about Rs 890 crore, with Ebidta margins at 56.8 per cent.
The JV with Blackrock will give JFS access to BlackRock's expertise in investments and risk management, as well as its risk management systems such as Aladdin. Blackrock had earlier partnered with DSP, and exited the country in 2018.
Also read: Adani Wilmar Q1 results: Adani firm may report single-digit rise in profit, says Nuvama
Also read: Larsen & Toubro shares to turn ex-dividend today. Key details