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Reliance Financial to be renamed JFSL after regulatory approval

Billionaires Mukesh Ambani-led Reliance Industries RIL today announced that its financial services arm Reliance Strategic Investments will be renamed JFSL later on after getting regulatory approval on the demerger last month. The move will unlock value for RIL, India's largest company by market capitalisation, for 36 lakh-strong shareholders. RIL shareholders will receive a share of Jio Financial for every share they own of RIL. The stock has already risen 13% in the last three months and is marginally lower at Rs. 2,635. In accordance with the terms of the scheme, Thursday July 20th, 2023 has been fixed as the Record Date for the purpose of determining the equity shareholders of the Company entitled to receive the Resulting Company New Equity Shares, RIL said in a regulatory filing. The board has also approved the appointment of Hitesh Sethia as the CEO and MD of RSIL for three years. Mukesh Ambani's daughter Isha has also been appointed as a non-executive director of the financial services company, subject to approval from the Reserve Bank of India RBI. In RIL's annual general meeting AGM, which has not been announced yet, Ambanis are expected to lay out the JFSL roadmap before it gets listed on stock exchanges. It was previously reported that JFSL could be listed in September, but an official announcement is awaited. JPMorgan's global brokerage firm JPMorgan estimates Jio Financial's share price at 189, Jefferies at 179 and Centrum Broking has a range of 157 - 190. JPMorgan, with an overweight RIL rating with a target price of Rs. 2,960, believed that the expected value could increase once the business strategy and targets are made public. JFSL will be India's fifth-largest financial institution in terms of capital and will compete directly with Paytm and Bajaj Finance RSIL and Financial Services undertaking has a combined net worth of Rs 280 billion FY22 which includes investments of 6.1% stake market value of Rs 980 bn in RIL. Centrum Broking said JFSL may continue to monetize its investments for growth and incubate other businesses in financial services. The financial services company has investments in six companies - Reliance Industrial Investments and Holdings RIIHL Reliance Payment Solutions, Jio Payments Bank, Reliance Retail Finance, Jio Information Aggregator Services and Reliance Retail Insurance Broking. We value JFSL's core networth at 3 - 5 x P BV and invest in RIL at 30 % holding company discount to arrive at a price range of 157 - 190 for JFSL. Post demerger, promoter's stake in JFSL will be at 49.11%. JFSL's share value in Ril's SOTP is in the price range of Rs 147 - 178, Centrum said. RIL said the demerger decision was taken as the nature and competition in financial service business is distinct from other firms and is able to entice a different set of investors, strategic partners, lenders and other stakeholders.

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9 Comments

Avatar of AZUK00

AZUK00

The appointment of Mukesh Ambani's daughter as a non-executive director raises questions about potential conflicts of interest and nepotism within the company.

Avatar of Azukkk

Azukkk

The appointment of Mukesh Ambani's daughter as a non-executive director raises questions about potential conflicts of interest and nepotism within the company.

Avatar of AZUK00

AZUK00

The demerger could lead to increased market volatility as investors react to the changes in the company's structure and potential impact on its financial performance.

Avatar of Katchuka

Katchuka

The entry of JFSL into the financial services market will lead to increased competition, benefiting consumers by providing more choices and potentially driving innovation and better services.

Avatar of Loubianka

Loubianka

Analysts have estimated a range of share prices for JFSL, indicating the potential for attractive valuations and investment opportunities once the company gets listed on stock exchanges.

Avatar of Katchuka

Katchuka

The demerger decision reflects the company's commitment to prioritizing shareholder interests and ensuring the long-term financial success of RIL and JFSL.

Avatar of KittyKat

KittyKat

The reliance on speculation and estimates by brokerage firms to determine the potential share price of JFSL raises doubts about the company's future prospects and financial stability.

Avatar of Muchacho

Muchacho

The demerger of the financial services arm may result in a diversion of resources from other parts of the company, potentially impacting their growth and profitability.

Avatar of ZmeeLove

ZmeeLove

The demerger of the financial services arm and the renaming of JFSL will unlock value for RIL's shareholders, allowing them to benefit from the separate listing and potential growth of JFSL.

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