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Reliance Industries Demerger Announcement Sparks Interest in the Markets

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Following the announcement of the record date for the demerger of Jio Financial Services, investors rushed to buy shares of Reliance Industries (RIL), leading to a surge in the Nifty stock. The stock rallied up to 4.5% and reached a fresh 52-week high of Rs 2,755. Additionally, trading volumes on the BSE increased by 3.6 times.

What are the demerger terms for Reliance shareholders?

Under the demerger deal, all RIL shareholders as of the record date, which is set as 20th July 2023, will receive one share of Jio Financial Services (JFSL) for every RIL share they own. Investors have until July 19 to acquire RIL shares if they wish to participate in the demerger and be eligible to receive JFSL shares.

Stock Performance of Reliance Industries Ltd in the last 1 year:

Here are my views on the RIL demerger announcement:

The demerger is expected to provide significant benefits to existing Reliance shareholders, much like Adani’s previous strategy of separating its business segments into new entities and expanding within each one and also creating significant value.
JFSL, through its diversification into insurance, payments, digital broking, and asset management, will directly compete with well-established companies such as Paytm and Bajaj Finance in the highly competitive financial services industry. However, JFSL has a competitive advantage in the form of its extensive JIO database, which can serve as a leverage point. This disruption is reminiscent of the impact JIO made when it entered the telecommunications market. It will be a volume play, targeting small merchants and providing finance at minimal price. Furthermore, JFSL has a robust net worth of approximately 1.5 lakh crores, and access to cheaper capital, positioning it strongly in comparison to its industry peers.

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Divam Sharma

Divam Sharma is the Co-Founder of Green Portfolio. He is Chartered Accountant, holds an MBA from ISB, Hyderabad and a Masters in Business Finance from ICAI | The content in this article is purely the author’s personal opinion and is for informational and educational purposes only. It should not be construed as professional financial advice and nor to be construed as an offer to buy /sell or the solicitation of an offer to buy / sell any security or financial products. The views and opinions stated in the content belong to the author. GREEN PORTFOLIO PRIVATE LIMITED does not uphold nor promote any of the views / opinions. | GREEN PORTFOLIO PRIVATE LIMITED is a SEBI registered research analyst (Regn. No. INH100008513)

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Reliance Industries Demerger Announcement Sparks Interest in the Markets

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