Shares of oil-to-telecom major Reliance Industries rose nearly 1 percent during the special muhurat trading session on October 24 after the company said that it will demerge and list its financial services business housed under Jio Finance Services.
On October 21, RIL announced that shareholders will get one share of Jio Financial Services for every share held in the company by them.
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“We view the JFS demerger as very positive, as it allows for the creation of a consumer and merchant lender leveraging RIL’s Digital and Retail strengths,” brokerage firm JP Morgan India said in a note.
Jio Financial Services intends to become a financial technology major leveraging RIL’s digital capability and focus on the delivery of digital lending services. The company will launch consumer and merchant lending products along with expand into insurance, stock broking, and asset management services over the coming years.
“We believe this would be welcomed by investors given RIL’s massive footprint across Jio and Retail,” JP Morgan said.
Brokerage firm BofA Securities said that it expects limited upside in the stock from the demerger of the financial services business. “We expect limited value unlocking given smaller contribution and share dilution,” BofA Securities said.
Besides the demerger announcement, RIL also reported its September quarter earnings with a strong performance from the consumer-facing businesses of the company. RIL’s consolidated net profit came in largely flat on a year-on-year basis at Rs 13,656 crore for the quarter that ended September.
The company’s topline, however, grew nearly 34 percent on-year to Rs 2.3 lakh crore driven by a strong performance of retail and telecom business during the quarter.
At 6:43 pm, shares of Reliance Industries were up 0.8 percent at Rs 2,483.6 on the National Stock Exchange.
(Disclosure: 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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