JFS shares will be included on indices such as Nifty temporarily for price discovery, as Reliance Industries turns ex-date for the demerger. 
Special 
JFS shares will be included on indices such as Nifty temporarily for price discovery, as Reliance Industries turns ex-date for the demerger. Reliance Industries Ltd (RIL) shareholders, who would be holding the company shares on June 20, would soon be allotted shares of demerged entity Reliance Strategic Investments (to be renamed as Jio Financial Services or JFS) in the 1:1 ratio. JFS would be listed on stock exchanges, probably, in the next 2-3 months at price anywhere between Rs 150 and Rs 190, as per analysts.
Before that, JFS shares will be included on indices such as Nifty temporarily for price discovery, as Reliance Industries turns ex-date for the demerger. A dummy ticker will be created for the same after today's market hours, as per the NSE's recent index methodology.
Impact on RIL shares, JFS inclusion
Since 6.1 per cent of treasury shares in RIL is being transferred to the demerged entity, the corporate event will impact Reliance Industries shares, which will be visible on the counter on Thursday morning. That said, JFS would also be added to Nifty (51 stocks to trade on index) at a constant price.
This constant price would be derived from the difference between Reliance Industries (the demerged company) closing price today (T-1 day, wherein T is ex-date for demerger) and price derived during special pre-open session (SPOS) on July 20. For example, if Reliance Industries shares settle at Rs 2,850 today and trade at Rs 2,700 in the special pre-open session, the value for JFS would be Rs 150.
On July 20, Nifty will be represented by 51 securities with initial price of dummy symbol set to be zero. The special session for price discovery will take place between 9 am and 9:45 am.
During the SPOS, Nifty value will be calculated using the most recently available price of 49 stocks, previous day’s closing price of RIL (50th security) and zero price of dummy symbol. After the closure of SPOS, discovered price and indicative price of dummy would be calculated simultaneously.
The newly listed symbol would be a part of the index for a temporary period. As per NSE Indices methodology, the new symbol will be removed from the index after end of day (EOD) on third day of its listing.
"In case, during the first 2 days of these 3 days, if the spun off business/entity hits the price band on both days, then the exclusion date shall be deferred by another 3 days. After observing two consecutive days of the spun off business/ entity not hitting the price band, such spun off business/entity shall be removed after the third trading day of such observation," Nifty Indices – Methodology Document, July 2023 suggested.
"If on such 3rd day spun off business/ entity again hits the price band, exclusion of such stock shall not be deferred anymore," it added.
What analysts say
Centrum Broking expects JFS to eventually list in the Rs 157 -190 range. It said FSL may in staggered manner monetise its investments for growth and incubate other businesses in financial services. It will be the fifth largest financier in terms of capital, Centrum Broking said.
Axis Securities recommended investors to buy Reliance Industries shares before the record date i.e. by July 19 as it believes it to be a more economical way to buy Jio Financial Services that is likely to list at Rs 160 per share. Nuvama estimates a value of Rs 168 per share for JFS.
Axis Securities said it values Jio Financial Services at the treasury stock valuation of Rs 1,08,597 crore at 1 time RIL’s treasury stock valuation. The company’s total outstanding shares stand at 676.6 crore, implying each share’s valuation would be Rs 160 per share, Axis Securities said.
"The structure of the counter looks good for long-term investors. Those who want the benefit from Jio Financial Services can take a position in Reliance today on a delivery basis," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.
Nuvama estimates a value of Rs 168 per share for JFS, which is currently a part of non-operating assets in its SoTP valuation. It ascribed a value of Rs 323 per share to non-operating assets. In addition, it value treasury shares at Rs 168 per share based on RIL’s closing price on July 14.
"We argue that RIL stock could be least impacted by this demerger and instead see an upside of 3-5 per cent," it said.
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