RIL-Jio Financial demerger FAQ: Here is what shareholders need to know
- The stock exchanges conducted a special pre-opening session for the discovery of RIL share price and that of its financial arm JFSL. RIL share price was discovered at ₹2,580 per share.
Reliance Industries - Jio Financial Services Demerger: Reliance Industries Ltd. (RIL) share price gained over a percent after the demerger of its NBFC unit Jio Financial Services Ltd (JFSL), which was valued at ₹261.85 per share, much higher than analysts estimates.
The stock exchanges conducted a special pre-opening session for the discovery of RIL share price and that of its financial arm JFSL. RIL share price was discovered at ₹2,580 per share.
The billionaire Mukesh Ambani-led oil-to-telecom conglomerate had earlier announced to spin off Reliance Strategic Investments Ltd., which would become Jio Financial Services and the demerger ratio was fixed at 1:1.
Here are all the questions answered on the RIL-Jio Financial Services demerger:
What is the share price of Jio Financial Services Ltd?
Jio Financial Services share price has been derived at ₹261.85 apiece on the NSE after the special pre-open call auction session on stock exchanges on Thursday.
JFSL stock price would remain at ₹261.85 until it lists on the bourses.
What is the Reliance Industries share price ex-Jio Financial Services?
Reliance Industries share price opened at ₹2,580 per share ex-Jio Financial Services (JFSL) after the special pre-open call auction session on the stock exchanges Thursday.
On BSE, Reliance share price opened at ₹2,589 apiece, while it started trading at ₹2,580 per share on the National Stock Exchange (NSE).
RIL share price gained over a percent after the demerger.
How will domestic passive Indices treat Jio Financials (JFSL) ?
Jio Financial Services will be maintained in all the NSE and BSE Indices at a constant price of 261.8 per share which is derived on Thursday, July 20.
However, the stock will be dropped from all the NSE and BSE indices at the last traded price which is effective at the open of JFSL listing date + 3 business days.
For Instance: If, supposedly, JFSL lists on August 21, 2023 then stock will compulsorily be deleted on August 24, 2023, explained Abhilash Pagaria, Head, Nuvama Alternative and Quantitative.
What will be the JFSL outflow quantum led by selling of domestic passive trackers?
As per Nuvama Quant preliminary estimates, the outflow would be around 150 million shares.
Assuming the hypothetical price scenario for JFSL on its Trading (T) + third day of listing - at ₹261.85 per share – Nifty 50 Index passive trackers could sell around 90 million shares which is equivalent to approximately $290 million, Pagaria said.
Moreover, Sensex Index trackers could sell 55 million shares which is equivalent to $175 million, he added. At the current free float - assuming weightages of less than 1% in Nifty 50 and around 1% in Sensex.
It is to be noted that the above calculation is assuming prices of other member constituents remain the same (closing of July 19 , 2023). Also, these calculations are ballpark calculations.
Also Read: Reliance demerger: Jio Financial Services valued at ₹261.85, surpasses analysts estimates
Do passive fund managers need to make any adjustments on July 20, 2023?
No. The end of the day index weightages file will automatically get adjusted to the free float market-cap of existing constituents plus Jio Financials.
There will be churning or weight distribution (actual buying or selling) amongst other member constituents once Jio Financials starts trading and get excluded on Trading plus third day. So actual churning will happen on JFS exclusion day (in future), Pagaria explained.
In which indices will Jio Financial Services be included?
Jio Financial will be temporarily added to Nifty50 along with 18 other indices of NSE, including Nifty 100, Nifty 200, Nifty 500, Nifty Energy, and Nifty Oil & Gas without replacing any stocks.
Jio Financial will also be added to 18 of the S&P BSE indices also, including the S&P BSE Sensex, starting July 20 for a period of three days. After three days, it will be dropped from all the indices at the last traded price.
How will global indices react?
MSCI Standard Index will maintain demerged entity JFSL in the Index. The Official circular reads – “Based on the estimated post-event company full and float adjusted market capitalizations, JIO FINANCIAL SERVICES satisfies the criteria to be added to the Large Cap segment of MSCI Global Standard Indexes.”
FTSE - As per the current methodology , the stock (JFSL) will get excluded if it doesn’t list within 20 working days post Record Date of demerger. We will keep you posted incase FTSE makes any official announcement on the same.
Will JFSL be added in weight calculation in key passive indices and other broader Indices?
Yes, JFSL will be 51st constituent in Nifty50 and 31st constituent in Sensex and on a daily basis will be considered in weight calculations of Index. However as it is not traded live so its market-cap and price will remain constant until it lists. Post its listing for three trading days, live market-cap will be considered to calculate weight in all the indices, Pagaria said.
Reliance Ind (Assuming price of INR 2,580) weight in Nifty 50 Index will move to around 10% in Nifty 50 Index vs appx 11.1% as on July 19th 2023 and in Sensex it will move to around 11.8% from 12.8% on July 19th, he added.
When will Jio Financial Services get listed?
There is no listing day announced yet. Analysts believe it may take a few weeks’ time to get all the listing approvals. However, they expect JFSL to be listed in a month’s time.
Pagaria noted two recent instances wherein Piramal Pharma got demerged from Piramal Enterprises and post record date it took almost 45 days for the listing, while NMDC Steel that got demerged from NMDC Ltd, took almost 4 months for the listing post record date.
Will Jio Financial Services be introduced in derivatives?
No, Jio Financial Services will not be introduced in derivatives. As per the current methodology, a stock needs to have at least a six month trading history to even qualify for derivative inclusion.
After fulfilling all the quantitative qualification criteria for the derivative inclusion, the stock will need SEBI approval (which is quite subjective), as per Pagaria.
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