Reliance Industries shares have gained 10% in the last one month and analysts expect further upside in the stock after Reliance Strategic Investments Limited is spun off into Jio Financial Services. According to Nuvama Institutional Equities, when Reliance Industries demerged four of its entities in 2005, the market ‘actually rewarded the RIL stock’
National Stock Exchange (NSE) will be conducting a special pre-open session for Reliance Industries Ltd (RIL) on July 20 as Jio Financial is set to enter the NSE barometer Nifty. As per the index methodology, the spun-off entity would be included in indices effective from July 20 (close of July 19)
"Back in 2005, when RIL demerged four entities, market actually rewarded RIL. After the split, shareholder wealth swelled 38%. Should the market have a déjà vu moment this time too, shareholders’ wealth could potentially increase by 3%–5%. The demerger of financial services is a spin-off of RIL’s 6.1% treasury shares (valued at INR117/share: 4% of CMP after assuming 30% holdco discount; Rs168/share or 6% of CMP ex-discount)," said Nuvama in its report
Global brokerage Jefferies is optimistic on RIL stock. It said, "RIL's foray into financial services with Jio-FS will open an opportunity to play in India's consumer/commercial loans & NLF side." The brokerage raised Reliance Industries' share price target to Rs 3,100 (factoring in the fully diluted share base), implying over 30% upside. "Stock trades near our bear case value and offers favourable risk-reward," the brokerage's note said
Jio Financial Services is set to enter the NSE barometer Nifty. It will also be added to three of FTSE Russell's indices namely, FTSE All-World Comprehensive Factor Index, FTSE Emerging Comprehensive Factor Index, and FTSE All-World ex CW Balanced Factor Index effective July 20. As per a domestic brokerage, JFS will be listed within 2-3 months. Another brokerage pegged JFS listing price at around Rs 175-190 levels
Domestic brokerage Motilal Oswal Financial Services 'maintained' a buy call on RIL stock post the demerger news with a target price of Rs 2,825 per share. Axis Securities also recommended investors to buy Reliance Industries shares before the record date i.e. 20th July as it believes it to be a more economical way to buy Jio Financial Services which is likely to list at Rs 160 per share
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 RIL 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
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 values 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%," it said
Axis Securities in its report 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 shareholding pattern will be the same as that of Reliance Industries Ltd. We value JFSL at treasury stock valuation as the business model of the company is yet to be announced. Even if the entire allocation is not directed towards JFSL, the company might be able to leverage the same for regulatory funds," said Axis Securities
Shares of Reliance Industries Ltd (RIL) jumped in Tuesday's trade to hit a 52-week high of Rs 2,837.45 apiece after the oil-to-telecom major said it would consider paying dividend when its board meets on Friday. Reliance Industries will be declaring its June quarter results on July 21
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