Shares of India's largest company by market capitalisation, Reliance Industries (RIL), hit a fresh 52-week high in Wednesday's trade ahead of the demerger of the financial services arm Jio Financial Services. The scrip rose over 1 percent to hit a 52-week high of Rs 2,855, which it touched on April 29, 2022. The counter has surged 10.76 percent on a year-to-date basis and 14 percent in the last one year.

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RIL has set July 20 as the record date for the demerger of its financial services arm Reliance Strategic Investments, which would be renamed later on as Jio Financial Services (JFSL).

The demerger will unlock value for 36 lakh-strong shareholder base of RIL. As part of the plan, Reliance shareholders will get one share of Jio Financial for every share of RIL owned. For example, if you own 100 RIL shares, you will be awarded with 100 JFSL shares.

JFSL share price

The NSE will conduct a special pre-open session from 9 am to 10 am in Reliance Industries stock tomorrow, on account of the demerger of the financial services business of the company. This means, normal trading in shares of Reliance will take place after 10 am.

How will it work? For example:

a) During the special session on Thursday, RIL is trading at 2700.

b) The closing price of RIL on Wednesday was 2,853.

c) After the demerger, the spun-off business Jio Financial Services will have a separate listing and its stock price will be set at 153 (2853-2700)

JFS shares will be added in the indices, including Nifty 50, at a price of Rs 153 per share. It will remain in the indices at this constant price of Rs 153 until Jio Financial is officially listed as a separate entity. As a result, temporarily, Nifty 50 will have 51 stocks.

"Investors who want to get shares of Jio Financial Services should buy shares of Reliance Industries before the record date," said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.

"The current estimated price of Jio Financial Services is around Rs 150-200 per share, but this could change depending on the company's performance after demerger. We have a bullish view of Jio Financial Services as we believe that Reliance Industries has the scale and reach to cater to the large and growing Indian financial services market," Gour added.

JFSL is expected to get listed in the next 2-3 months. More details are likely to come out in Reliance Industries' upcoming annual general meeting (AGM).

Once Jio Financial stock is listed on a future date, it will be removed from the indices three days after its listing, subject to certain price conditions. For example, if Jio Financial lists on day T, it will be delisted from the indices at the end of T+3 days.

Tech View

Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher said the stock of RIL has witnessed a decent rally in the last three months to scale almost the previous peak zone of 2850 levels where it can find resistance and can witness some profit booking or consolidation in the coming days.

"Only a decisive breach above 2850 zone can confirm a clear breakout to anticipate for further rise for next targets of 2950-3000 levels. the near-term support would be at around 2700 zone," Parekh said.

Global brokerage firm JPMorgan has estimated Jio Financial's share price at Rs 189, Jefferies at Rs 179, while Centrum Broking has a range of Rs 157-190.

JPMorgan, which has an overweight rating on Reliance with a target price of Rs 2,960, believes that the implied value could move higher once the business strategy and targets are made public.

First Published:Jul 19, 2023 8:02 PM IST