NCLT Approves Financial Services demerger with Reliance, stock extends gains

New Delhi, 7th July 2023: After the National Company Law Tribunal (NCLT) approved the plan of arrangement for Reliance Strategic Investments, shares of Reliance Industries Ltd. are the top contributors to the Nifty 50’s upside and are also leading the index’s rebound on Friday.

The business stated that it will now take the appropriate steps for the renaming and listing of Reliance Strategic Investments as JIO Financial Services Ltd.

Jio Financial Services would raise funds from Reliance Industries treasury shares of Rs 1 lakh crore. If a minimum leverage of three times is assumed, Jio Financial Services’ book size might be worth Rs 3 lakh crore, which is greater than Bajaj Finance’s Assets Under Management of Rs 2.7 lakh crore.
NBFCs currently have a leverage of 5-6 times.

According to Macquarie, Jio Financial Services will be valued at more over Rs 1.52 lakh crore, making it the fifth-largest financial services firm in India.

JPMorgan has kept its overweight rating on the company and set a price target of Rs 2,960. The brokerage anticipates further information on Jio Financial Services during Reliance Industries’ next annual general meeting.

JPMorgan has currently assigned solely the treasury share in Reliance Industries that JFS would own as value for JFS.

Reliance Industries shares were trading at 0.7 percent higher at Rs 2,657.40. With 14.4 points to the upside, the stock is the largest contributor to the Nifty 50’s recovery from opening lows.