Reliance's Shares Surged Beyond 4%: What Fueled The Stock Price Rally?

The share price of Reliance Industries Limited has rallied beyond 4.2% in today's trade on account of its announcement of demerging. It ended the day at Rs 2311.05 per equity share. The business conglomerate has initiated a process of demerging its financial services business, as per Economic times news report. The decision was intimated through an exchange filing.

As per the exchange filing, the company announced through an advertisement of notice, that on May 2, 2023, there will be a meeting to discuss and approve demerger of its financial service arm, Reliance Strategic Investments Limited.

In the notice it was given that, "the meeting of secured creditors of Reliance Industries Limited ("Company" or "Demerged Company"), for the purpose of considering, and if thought fit, approve the proposed scheme of arrangement between Reliance Industries Limited and its shareholders and creditors & Reliance Strategic Investments Limited ("Resulting Company" or "RSIL") and its shareholders and creditors ("Scheme")."

Post the demerger, Reliance Strategic Investments Limited, will be renamed to "Jio Financial Services Limited". Shareholders of Reliance Industries will receive one share of the demerged entity for every one share held in the company.

The demerger will be done through a share-swap arrangement. The turnover of the financial services business as of March 31, 2022, was Rs 1,387 crore. KV Kamath would be the non-executive chairman of the new company.

Jio Financial Services plans to launch a consumer and merchant lending business to complement and supplement the traditional credit bureau-based underwriting.