At end of a special trading session on stock exchanges on July 19 for the price discovery of Reliance Strategic Investments Limited (RSIL), the market has assigned a price of Rs 261.85. RSIL, which houses the financial services business of the Reliance group, will be shortly renamed as Jio Financial Services (JFS). As a result of the demerger and price discovery, the share price of Reliance Industries has adjusted to the hiving off of RSIL from its fold.
We try to answer some of the basic questions that you may have relating to the demerger.
What is the eligibility criteria for receiving RSIL shares?
You will receive one share of JFS for every share held in Reliance Industries if your name figures in the record books of the company on July 20.
I can see that the RSIL shares are quoted on the stock exchanges. Can I trade in them?
No. The company has to first allot the shares to the eligible shareholderst, and then announce the date for listing of the shares. You cannot trade in RSIL shares till then.
Has the date for that been announced?
Not yet.
Also Read: Jio Financial Services investors sitting on 100% capital gain after price discovery
I can see that RSIL is also part of the Nifty at present. Won’t that distort the index?
True, for the time being, RSIL is part of all indices that RIL is part of. But RSIL’s price will remain constant till the shares are listed. Three days after the shares get listed and trading in them starts, RSIL will move out of the Nifty index as well as other indices where it does not belong.
Will RIL’s weightage in the Nifty change as a result of the merger?
No. because there is no change in the equity structure of RIL as a result of the demerger.
But the Nifty slipped into red today; was that because of the demerger?
No. To ensure there was no disruption in the index because of the demerger, RSIL has been listed as the 51st share on Nifty, with its weight adjusted accordingly. As a result, the combined weight and price of Reliance plus RSIL remains the same as Reliance's closing value on July 19.
What were analyst expectations on the price discovery of RSIL?
Analysts had pegged the value of RSIL shares between Rs 160- Rs 190
How will be capital gains tax gains be computed on the RSIL shares?
RIL has issued a statement that the post-demerger cost of acquisition of RIL share is 95.32 percent and RSIL share is 4.68 percent. Assume you had bought the RIL share on July 19 at Rs 2,840. Then Rs 2,707 would be the value of your RIL holding and Rs 133 the value of your RSIL holding. So, Rs 133 in effect is the acquisition price of RSIL. Capital gains will be calculated on the difference between the price at which the shares are eventually sold minus Rs 133 (assuming you bought the share at Rs 2,840)
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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