RIL shares in focus as value unlocking begins via JFS. Listing date, likely listing price & more

Shares of Reliance Industries Ltd (RIL) will be in focus on Monday morning after the NCLT's go ahead for the demerger of financial services business into Reliance Strategic Investments (RSIL), which would be renamed as Jio Financial Services (JFS). The record date is set at July 20 and the listing is expected to happen within the next 2-3 months, analysts said. The effective date of the scheme is July 1.

Every RIL shareholder will get one RSIL share with a face value of Rs 10. Adjusted for the treasury shares of 6.1 per cent (41 crore shares), total shares outstanding in JFS will be 635 crore, Motilal Oswal Securities said in a note.

"JFS owns 6.1 per cent in RIL, which is valued at Rs 1.1 lakh crore. This would represent a substantial portion (90 per cent) of JFS’s net worth. Excluding investments in RIL shares, JFS’s net worth would be Rs 10,000 crore. Assuming that the investments in RIL shares represent 90 per cent of JFS’s networth, the book value per share of JFS would be Rs 190. Our current SOTP-based TP of Rs 2,825 for RIL does not include the JFS value; hence, this event could lead to value-unlocking potential for RIL," Motilal Oswal Securities said.

Centrum Broking said JFSL may in staggered manner monetise its investments for growth and incubate other businesses in financial services. "While MTM gains are not used for the calculation of Capital Adequacy Ratio (CAR), JFS has total capital of Rs 1.19 lakh crore calculated on market value of investments. It will make JFSL the fifth largest financier in terms of capital. We estimate JFS to list in the range of Rs 157-190," Centrum Broking said.

This brokerage noted that JFS has plans to launch consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting. JFS will continue to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments, it said.

Reliance Industries shares have risen 2.34 per cent year-to-date against 6.72 per rise in the BSE Sensex. Analysts sees improving news flow should lift the stock. JPMorgan has a target of Rs 2,960 on the stock.

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