Reliance Industries' 'Buy 1 Get 1' offer rewards shareholders with Jio Financial Services shares.
Mukesh Ambani's 'buy 1 get 1' offer for Reliance Industries shareholders has sparked excitement among retail investors. As of today's trading session, there are 36 lakh RIL shareholders who will be eligible for one share of Jio Financial Services (JFSL) for each RIL stock they own.
RIL's stock reached an all-time closing high of Rs 2,820.45 on NSE, making its market value an impressive Rs 19.1 lakh crore or $232.8 billion.
So, what does this offer mean for shareholders? All RIL shareholders as of July 19 will receive JFSL shares in a 1:1 ratio. For instance, if you own 100 RIL shares, you'll be awarded 100 JFSL shares.
The share price of JFSL will be determined through a special pre-open session in RIL stock on Thursday, from 9-10 am. The constant price will be the difference between RIL's closing price on Wednesday and the derived price during the special session.
Analysts estimate JFSL's value to be above Rs 1-lakh crore, with different brokerages giving varying values, such as Rs 160-190.
Now, why did RIL choose to demerge JFSL? The expansion and growth of financial services necessitated a distinct strategy aligned with its specific risk, market dynamics, and growth trajectory. Financial services require a different set of investors, partners, lenders, and stakeholders. A separate financial service company allows higher leverage for growth and unlocks value for RIL shareholders.
JFSL's business involves investment and other financial services, including NBFCs, insurance broking, payments bank, and more, both directly and through its subsidiaries and joint ventures.
As per experts, JFSL is expected to get listed in the next 2-3 months, and more details will be revealed in RIL's AGM.
After the demerger, RIL stock may witness a dip initially, but history shows that it could recover later. Back in 2005, when RIL had demerged four entities, its share price spiked by 38% in January 2006. Analysts believe shareholders' wealth could potentially increase by 3%-5%. However, it's essential to note that RIL stock might experience a dip on Thursday due to the demerger. JFSL's share price could range from Rs 150-200, meaning RIL's stock may fall by a similar amount post-demerger.
Read more: Meet Chandubhai Virani, man who almost had no money, built Rs 4,000 crore company
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