RIL up 4%; sets July 20 as record date for share allotment in Jio Financial

Shares of Reliance Industries (RIL) surged nearly 4 per cent to Rs 2,728.35 on the BSE in Monday’s intra-day trade after the company fixed July 20, 2023 as the record date to determine shareholders entitled to receive shares in its new financial services entity.

Under the arrangement, shareholders of RIL will get one share each of Reliance Strategic Investment (RSIL) for every one share held in RIL as of the record date. Reliance Strategic Investment will be demerged and later renamed and listed as Jio Financial Services.

RIL was trading close to its 52-week high level of Rs 2,754.70, touched on December 1, 2022. The stock had hit a record high of Rs 2,855 on April 29, 2022. In the past one month, it has rallied 10 per cent as compared to a 4 per cent rise in the S&P BSE Sensex.

The conglomerate also announced that Hitesh Kumar Sethi will head the new financial services entity as managing director and chief executive officer for a period of three years, subject to RBI approval.

Reliance had previously announced plans to demerge its financial services undertaking into Reliance Strategic Investments Limited (RSIL) and rename and list it as Jio Financial Services Limited (JFSL). It will lend to consumers and merchants based on proprietary data analytics and will eventually branch out to insurance, payments, digital broking and asset management.

That apart, the company has also decided to reduce the share capital of its step-down subsidiary Reliance Retail, to the extent held by Reliance Retail’s shareholders other than promoters and Reliance Retail’s holding company, Reliance Retail Ventures Ltd.

Shareholders whose holding will be affected will be paid Rs 1,362 for every share they hold. The board of Reliance Retail, on July 4, 2023, approved the proposal in which shares held by such shareholders shall stand cancelled and extinguished as per the capital reduction plan.

This effectively values Reliance retail at around Rs 6.8 trillion which is around 30 per cent of current Reliance Industries Market cap. While we valued Retail business at Rs 9.5 trillion (1 year forward), the price in the grey market was trading at exorbitantly higher levels at Rs 2700-3000/share (Market value: Rs 14 -15 trillion), ICICI Securities said in a note.