Reliance shares hit 52-week high; what’s fuelled the rally?

Billionaire Mukesh Ambani-led Reliance Industries (RIL) saw strong buying on Monday, with its shares hitting a fresh 52-week high after the oil-to-telecom conglomerate fixed July 20 as the record date for the demerger of its financial services arm Reliance Strategic Investments (RSIL). The share price of the country’s most valued firm gained 4.5% to hit the 52-week high of ₹2,755 in intraday trade, breaching its previous high of ₹2,754.70 touched on December 1, 2022.

Early today, RIL shares opened at ₹2,686, up 1.9% against Friday’s closing price of ₹2,635.45 on the BSE. Extending opening gains, the blue chip stock touched a new record high of ₹2,755 on the back of strong volume trade. Nearly 9 lakh shares changed hands over the counter on the BSE compared with a two-week average volume of 3.08 lakh stocks, while the market capitalisation rose to ₹18.59 lakh crore.

At the current price level, RIL share price trades 26% higher than its 52-week low of ₹2,180 touched on March 20, 2023. The largecap stock has underperformed the BSE Sensex in the one year period, but it outpaced the equity benchmark in the last three months. RIL shares have risen 14.4% in a year compared to 21.2% growth in the Sensex during the same period. In the calendar year 2023, RIL shares climbed 7.15% versus 7.5% by Sensex, while it jumped 16.5% in three months as against 9.3% rise in the BSE benchmark during the same period.

Reliance shares have added 10% in a month and 6% in a week, compared with 4.4% and 0.4%, respectively, by the Sensex during the period under review.

Investors rushed to buy RIL shares after the company received approval for the demerger of its financial services arm, which would unlock value for its 36 lakh shareholders. The conglomerate proposes to demerge its wholly-owned subsidiary, RSIL, into a separate entity, which would be later renamed Jio Financial Services Limited (JFSL). The new entity will be listed on the domestic stock exchanges, BSE and NSE.

Under the demerger scheme, Reliance shareholders will get one share of RSIL for every share they own of RIL as of the record date. The company has fixed July 20 as the record date for the demerger of RSIL.

In a meeting on July 8, RSIL’s board had approved the appointment of Hitesh Kumar Sethi as managing director and chief executive officer of the new entity for a period of three years, subject to the Reserve Bank of India’s approval. The board of the new company has also appointed Isha Mukesh Ambani and Reliance executive Anshuman Thakur as non-executive directors.

Besides, former Union Home Secretary Rajiv Mehrishi, former MD and CEO of Punjab National Bank Sunil Mehta, and Bimal Manu Tanna, a chartered accountant who worked with PwC, have been appointed as independent directors on the board of RSIL. “The directors will be appointed for a term of five consecutive years up to July 6, 2028, subject to approval of the members.”

Last week, the National Company Law Tribunal (NCLT) Mumbai Bench had given its approval for the demerger of the company's financial services unit and its listing on the stock exchanges. In May this year, the oil-to-telecom conglomerate had received the approval from its shareholders and creditors for the same.

Reliance has been building a vibrant financial services platform to create value for every stakeholder. JFSL is uniquely positioned to capture multiple growth opportunities in financial services bringing millions of Indians into formal financial institutions. It will be a technology-led business, delivering financial products digitally by leveraging the nationwide omnichannel presence of Reliance’s consumer businesses, as per the company.

JFSL plans to acquire liquid assets to provide adequate regulatory capital for lending to consumers and merchants. Besides, it will incubate other financial services verticals such as insurance, payments, digital broking, and asset management for at least the next three years of business operations.

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