RIL sets Jio Fin’s demerger date, gains 4.6%; m-cap tops Rs 18.5 lakh cr

RIL shares closed at ₹2,735.25 apiece, up 3.86% from the previous close. Over 2 crore RIL shares exchanged hands on the BSE and NSE, four times its combined average daily volume for the last month, exchange data showed.

“JFS will become the fifth-largest financial services company in India by sheer size of its net-worth and has significant scope for balance-sheet expansion given its large distribution network as it has access to huge amounts of data – similar to global conglomerates such as Alibaba, Amazon, Apple, Google,” said Suresh Ganapathy, head of financial services research at Macquarie Capital.

“Banks are still the best way to play India’s financial theme,” Ganapathy said. “JFS’ impact on (India’s) banking sector could be a bit more moderate as banks have significant cost of funds advantage and ability to do a lot more business that NBFCs cannot do.”

On Saturday, RIL announced the record date to allot JFS’ shares to shareholders via Reliance Strategic Investments (RSIL). Eligible shareholders will receive 1 share of RSIL for every 1 share of RIL. Under the deal, RSIL will be renamed as Jio Financial Services (JFSL) which will be listed for trading on stock exchanges. Analysts expect JFS to get listed and begin trading at the end of August or by early September.”As JFS is a non-deposit taking NBFC, we have to wait for the finer details on its business model, lending operations, and the balance sheet size before we can assign any accurate value to the business,” said Ganapathy.

Meanwhile, US brokerage firms Jefferies and JP Morgan estimate JFS’ share price to be around ₹179 and ₹189 apiece, respectively. RIL saw its market capitalisation cross ₹18.5 lakh crore on Monday to extend its lead as India’s most valuable company.

Another RIL subsidiary, Reliance Retail, also announced a capital reduction exercise last week, sparking speculation of its possible demerger and subsequent listing, analysts said.

JP Morgan valued Reliance Retail at an enterprise value (EV) of $112 billion, a higher market-cap than FMCG giants like ITC and HUL. The US brokerage remains bullish on RIL and has a target price of ₹2,960 per share, which translates into a 8.22% upside from the current level.