- By Priyanka Payal
- Tue, 18 Jul 2023 03:39 PM (IST)
- Source:JND
The share price of Reliance Industries Ltd was up 0.71% at Rs 2,816.45 per share at 2:09 pm IST on Tuesday (July 18). RIL shares have been in focus recently as the record date for the demerger of Jio Financial Services from Reliance Industries is less than two days away.
RIL announced the demerger of Jio Financial Services (JFS) in its September quarter earnings results, for a ratio of 1 equity share of Jio Financial for 1 fully paid-up equity share held in RIL. The record date for the demerger is July 20 (Thursday).
This means that Thursday is the day to determine who is eligible to receive Jio Financial shares. Thus, if you hold 1 share of RIL in your account on July 20, you will be entitled to 1 share of Jio Financial Services. It must be noted that JFS will be listed as a separate entity on the stock exchanges in a few months.
So what all will happen on Thursday (July 20)?
The NSE will conduct a special pre-market session on July 20 for the price discovery of Reliance Industries following the demerger. The reference price used for the same will be RIL’s closing price on Wednesday (July 19).
To understand this with the help of an example, suppose Reliance ends at Rs 1,000 on Wednesday, while the share price of the company settles at Rs 900 at the end of the special session, the stock of Jio Financial Services will be quoted at Rs 100 (1,000 - 900).
After this, JFS will join the indices, at a fixed price of Rs 100. According to CNBCTV18, it will become the 51st stock on the Nifty 50 index, till the time it gets listed. It will not be replacing any other stock. However, the listing date is yet to be announced.
Once Jio Financial gets listed as a stock, the stock will be delisted from the index after the end-of-day on the third day of its listing (subject to price conditions).
For example, if Jio Financial lists on T, it will be removed from the indices at the end of T+3 days.
In the run-up to the record date, all Futures & Options (F&O) contracts of Reliance Industries will likely expire one day before the record date.
Jio Financial Services will own 413 million treasury shares of Reliance Industries, which is equivalent to 6.1% of Reliance’s total outstanding shares.
According to market observers, this 6.1% holding will translate into a price of Rs 150-200 per share.
On July 8, the company fixed July 20, as the record date to determine shareholders entitled to receive shares in its new financial services entity. Under the arrangement, Reliance Strategic Investment (RSIL) will be demerged and rebranded and listed as Jio Financial Services.
In an exchange filing, the company said: “In accordance with provisions of the Scheme, Reliance Strategic Investments Limited (“RSIL”) shall issue and allot 1 (One) fully paid-up equity share of RSIL having face value of Rs 10 (Rupees Ten) each for every 1 (One) fully paid-up equity share of Rs 10 (Rupees Ten) each of the Company (“Resulting Company New Equity Shares”) to the shareholders of the Company whose names are recorded in the register of members and/or records of the depository as on the Record Date.”
The demerger is seen as a trigger that can push RIL's share price northward. So the event is also seen as an exercise to drum up some demand. After all, why will people not rush to buy the stock just to get ownership of JFS shares too?
