RIL to stay in focus ahead of demerger record date, Q1 results

livemint.com:

NEW DELHI : Reliance Industries Ltd (RIL) saw its stock surge to a 52-week high of ₹2,802 last week aided by the announcement of the record date for demerger of its financial services business, and analysts expect the conglomerate to remain in focus ahead of its June quarter results. The record date for demerger is 20 July and RIL shareholders will be issued Jio Financial Services (JFS) shares in a ratio of 1:1 (one equity share of Jio Financial Services for every share held in RIL).

This led to an investor rush to buy RIL shares and be rewarded with shares of the financial services business that may see good gains post its listing, said analysts. Analysts have been valuing Jio Financial Services shares in RIL SoTP (sum of the parts valuations) in the range of ₹125-225.

Analysts at a foreign brokerage based on core net worth of Jio Financial Services and its value of stake in RIL, have valued Jio Financial Services in the range of ₹90,000 crore to ₹1.5 trillion, implying a ₹134-224 per share in RIL’s SoTP valuation. However, analysts are waiting for more clarity to emerge on valuations.

J.P.Morgan Equity Research said in a recent report that it expects RIL’s annual general meeting to lay out a more granular and detailed roadmap for strategy in Jio Financial Services. The starting point for valuation would be the 6% treasury stake in RIL, that JFS would own, and what optionality investors want to give to JFS, which would partly depend on what the AGM says on the strategy and growth plans.

“Our implied value for JFS currently stands at ₹189 per share and is based only on the treasury shares of RIL," said analysts at J.P Morgan. Nuvama analysts valued treasury shares at ₹168 per share (6% of market price) based on RIL’s