Reliance Share Demerger: All You Need to Know

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Reliance Share Demerger: All You Need to Know

Reliance Industries Limited (RIL), India's most valuable company, is set to undergo a significant change in its business structure through the demerger of its financial services arm. This demerged entity will be known as Jio Financial Services (Jio Financial). As investors eagerly anticipate the listing of Jio Financial, it is essential to understand the intricacies of this significant financial event. In this article, we'll delve into the details of the RIL-Jio Financial demerger, the impact on shareholders, and the implications for the stock market.

The Demerger Arrangement

The demerger of Jio Financial Services from Reliance Industries is a strategic move aimed at unlocking shareholder value and facilitating focused growth in both businesses. Under the demerger arrangement, existing Reliance shareholders will receive one share of Jio Financial for each share they hold in Reliance Industries. This means that shareholders' total ownership in the two entities will remain the same post-demerger.

Shareholding Pattern in Jio Financial

Post-demerger, the shareholding pattern in Jio Financial will mirror that of Reliance Industries. This continuity is designed to ensure a seamless transition and maintain stability in the ownership structure of both entities. Investors can look forward to the potential benefits of holding shares in a specialized financial services company through Jio Financial.

Pre-Trade Session at NSE

The National Stock Exchange (NSE) will conduct a special pre-trade session for Reliance Industries due to the demerger of Jio Financial Services. This unique session, scheduled for July 20, aims to determine the constant price for including Jio Financial in key stock market indices. The inclusion of a spun-off entity in these indices is a notable development following the introduction of new NSE rules.

Inclusion in Nifty Indices

While Jio Financial Services is set to be included in the Nifty indices initially, it is essential to note that this inclusion is not permanent. After three days of listing, Jio Financial's presence in the Nifty indices will be reevaluated. The company's performance during these initial days will determine its continued presence in these prestigious indices.

Impact on Reliance's Equity Derivative Contracts

To accommodate the demerger process, Reliance's existing equity derivative contracts will expire a day before the record date. Subsequently, new derivative contracts that reflect the post-demerger scenario will be introduced from July 20. Investors and traders will need to be aware of these changes to manage their derivative positions effectively.

 Valuation of Jio Financial Shares

Market analysts have estimated the value of Jio Financial shares to be between ₹160 and ₹200 per share, based on different brokerages' assessments. This valuation will play a crucial role in determining the initial price at which Jio Financial shares will be listed on the stock exchange.

Conclusion

The demerger of Jio Financial Services from Reliance Industries marks a significant milestone in the company's growth trajectory. As shareholders eagerly anticipate the listing of Jio Financial, the business landscape is poised for exciting changes. This strategic move is expected to unlock substantial value for shareholders while creating new opportunities in the financial services sector. Investors and market participants should closely monitor the post-demerger developments to capitalize on potential growth prospects.

What is the purpose of the RIL-Jio Financial demerger?

The demerger aims to unlock shareholder value and foster focused growth in both Reliance Industries and Jio Financial Services.

Yes, existing Reliance shareholders will receive one share of Jio Financial for each share they hold in Reliance Industries.

How will the shareholding pattern change post-demerger?

The shareholding pattern in Jio Financial will mirror that of Reliance Industries, ensuring continuity in ownership structure.

What will be the impact on Reliance's equity derivative contracts?

Reliance's existing equity derivative contracts will expire a day before the record date, and new contracts reflecting the post-demerger scenario will be introduced.

Is the inclusion of Jio Financial in Nifty permanent?

No, the inclusion is not permanent. After three days of listing, Jio Financial's presence in Nifty indices will be reevaluated based on its performance.