Sanjay Parekh, Founder and Chief Investment Officer of Sohum Asset Managers, believes Jio Platforms can create value for investors over the next one to three years, backed by its diversified digital services business, strong cash flow generation and scope to reduce debt. He also sees the company’s valuation as reasonable, given its growth prospects.
Speaking about the Jio Platforms IPO, Parekh said the offering could draw global investors to Indian equities, particularly as investors look for companies with strong business models and credible growth opportunities.
He said Jio Platforms is more than a connectivity business, with exposure to broadband, business-to-business (B2B) services, gaming, music, the Internet of Things (IoT) and cloud services.
He added, “This whole capability can be exportable not in developing countries, but developed countries that they are talking about. I am quite enthused with this IPO, and it will certainly create value over one to three years,” Parekh said.
The portion reserved for Qualified Institutional Bidders (QIB) for the Jio Platforms IPO has been fully subscribed within the first 30 minutes of the issue opening for subscription on Wednesday, October 21.
Jio Platforms’ ₹30,213 crore IPO is a full fresh issue of shares with no Offer For Sale (OFS) component and majority of the fresh issue proceeds will be used to pare down existing debt.
Parekh expects Jio Platforms to deliver healthy growth over the coming years, supported by its expanding digital ecosystem and cash-generating capabilities. He expects revenue to grow by around 15-17%, while EBITDA growth could reach 18%, based on his estimates.
He also considers the company’s valuation reasonable, pointing to an estimated enterprise value-to-EBITDA multiple of around 12 times for FY28. In his view, the company’s future growth prospects and ability to generate cash flow support its valuation.
The fresh capital raised through the IPO could also give Jio Platforms greater flexibility in managing its debt. The company would have the option to use its cash flows to reduce leverage or invest in further expansion, depending on its priorities.
Parekh said the combination of reasonable valuations, growth potential and participation from domestic and international investors had helped attract interest in the offering
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Jio Platforms can create value over the next 1-3 years, says Sanjay Parekh
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