Reliance Industries shares hit Rs 2,700 level, m-cap tops 18 lakh cr mark on JFS

Shares of Reliance Industries Ltd (RIL) jumped over 2 per cent in Monday's trade, pushing its market capitalisation past Rs 18 lakh crore mark, as details emerged on Jio Financial Services (JFS) demerger, which analysts said would lead to valuing unlocking at the oil-to-telecom behemoth. A brokerage anticipated Jio Financial Services listing within 2-3 months while another brokerage pegged listing price at around Rs 175-190 levels.

Shares of Reliance Industries climbed 2.44 per cent to hit a high of Rs 2,700 level. The most valued stock on Dalal Street enjoyed a m-cap of Rs 18,03,035.54 crore compared with Rs 17,83,043.16 crore on Friday, up Rs 19,992.38 crore.

To recall, Reliance Industries has received NCLT's go ahead for the demerger of financial services business into Reliance Strategic Investments (RSIL), which would later be renamed as Jio Financial Services (JFS). The record date is set at July 20. The effective date of the scheme is July 1.

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 target price 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.

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.

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.

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.

Centrum Broking said 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.

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