Mukesh Ambani-led Reliance Industries Ltd (RIL) recently announced that it is set to demerge its financial services arm and list it on the Indian stock exchanges. The demerge will be done through a share-swap agreement.
This means that the company will issue one equity share of the newly listed Jio Financial Services Ltd (JFSL) for every share of Reliance Industries Ltd held by the investors.
The focus of Jio Financial Services will be to become a major financial technology company. Further, it also plans to launch Consumer and merchant lending products and also enter into insurance, stock broking, and asset management in the next three years.
“JFS will be a truly transformational, customer-centric, and digital-first financial services enterprise offering simple, affordable, innovative, and intuitive financial services products to all Indians, ” Mukesh Ambani, Chairman and Managing Director of RIL, said.
Analysts see this as a positive development. Here is what they have to say:
“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 contributions and share dilution,” BofA Securities said.
According to a note by ICICI Direct, the long-term prospects and dominant standing of RIL in each of its product & service portfolios provide comfort for long-term value creation.
Apart from this, Reliance industries also published their quarterly results recently in an interesting manner. It became the first Indian company to use the Virtual platform ‘Metaverse’ to post its Q2 results.
The company reported revenue from operations of Rs 2.32 lakh crore which was an increase of 33.7 percent from Rs 1.74 lakh crore in the same quarter a year earlier. Their net profit in the period stood at Rs 15, 587 Crores up from Rs 15,440 crores in Q2 of the previous year.
Reliance Industries Limited, a Fortune 500 company, is the largest private sector corporation in India. It has a diverse presence in industries ranging from energy and petrochemicals to retail, telecommunications, and mass media.
Written by Anoushka Roy
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