RIL shares rise after NCLT approves demerger of financial services unit

Shares of Reliance Industries (RIL) continued gaining streak for the second straight session on Friday after the National Company Law Tribunal (NCLT) gave its approval for the demerger of the company's financial services unit and its listing. Billionaire Mukesh Ambani-led conglomerate has already received the approval of its shareholders and creditors to demerge its wholly-owned subsidiary, Reliance Strategic Investments Ltd (RSIL), from the parent company.

RIL shares opened at ₹2,632.80 against the previous closing price of ₹2,638.35 on the BSE. Paring opening losses, the stock gained as much as 0.6% to ₹2,654.95, while the market capitalisation climbed to ₹17.88 lakh crore. The stock is hovering around its 52-week high of ₹2,754.70 touched on December 1, 2022.  On Thursday, RIL shares ended 2.07% higher on the back of strong volume trade.

“We wish to inform you that the National Company Law Tribunal, Mumbai Bench (NCLT), vide its order dated June 28, 2023 (uploaded on the website of Hon’ble NCLT on July 5, 2023), has sanctioned the Scheme,” RIL said in a BSE filing on July 6.

The release further stated that RIL and RSIL will take necessary steps including fixing the record date for allotment and listing of equity shares of the latter on domestic stock exchanges.

RIL had previously indicated that it would demerge its financial services undertaking into RSIL. The demerger will pave the way for the splitting-off of the financial services arm into a separate entity, which will be listed on the domestic stock exchanges, BSE and NSE. The new entity will be named Jio Financial Services Limited (JFSL).

In May this year, the oil-to-telecom conglomerate had received the approval of its shareholders and creditors for the demerger plan. It had informed exchanges that the demerger would be done through a share-swap arrangement under which Reliance shareholders will be issued one equity share of JFSL for every share they hold in the company. The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL), which is a part of the financial services undertaking of RIL, will stand transferred to JFSL.

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.

In a separate filing, RIL said that CARE Ratings has reaffirmed the credit rating of ‘CARE AAA’ with ‘Stable’ outlook for the non-convertible debentures (NCDs) of the company. The agency believes that RIL will continue to maintain its leadership position in its diversified key business segments, viz., oil to chemicals, telecom and retail, which shall lead to sustenance of its strong credit profile on a consolidated basis.

“The ratings also factor in the leadership position attained by the group’s telecom venture in the industry, the leadership position in the organised retail sector as well as the induction of various strategic partners in the digital, retail and media & entertainment businesses. RIL’s strong consolidated financial risk profile, marked by its comfortable capital structure and superior liquidity as well as financial flexibility, further underpin its ratings,” CARE Ratings said in its report.

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