Jio Platforms is set to launch India’s largest initial public offering on October 21 to raise ₹30,000 crore, an issue analysts consider attractively priced with significant room for listing gains.
The stock would need to appreciate by 25% upon listing just to bridge the valuation gap with telecom rival Bharti Airtel, according to Dipan Mehta, Director at Elixir Equities.
“I think it’s very well priced, very attractively priced,” Mehta noted. He expects the company to command a premium over its peers, offering investors a rare opportunity to buy into a standalone, high-growth large-cap stock.
With major capital expenditure largely completed, the telecom network will serve as the foundational platform for emerging consumer-facing technologies, including artificial intelligence and data centers. As a key monitorable, investors should track the lock-in expiry dates for earlier shareholders, which could introduce fresh equity supply into the market.
A listing gain of 10% to 12% above the IPO price band would elevate Jio Platforms to India’s second-largest company by market capitalization. It would surpass Bharti Airtel and HDFC Bank, both of which are valued at nearly ₹11 lakh crore, and sit only behind Reliance Industries at ₹15 lakh crore. The grey market is already hinting at a premium of ₹150 to ₹200 per share.
It must be noted that the GMP rates are speculative in nature and the actual listing price could differ from the GMP rates.
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At an implied valuation of ₹10 lakh crore, the issue is priced 10% to 15% below its fair value of ₹11.5 lakh crore to ₹12 lakh crore, according to Piyush Pandey, Senior Vice President at Centrum India. This discount accounts for current market headwinds, including a higher cost of capital and foreign institutional selling, while leaving value on the table for new investors.
Centrum projects a 13% revenue growth rate for the company over the next four to five years, alongside a 200 to 300 basis point improvement in earnings before interest, taxes, depreciation, and amortization (EBITDA) margins. Profit after tax margins are expected to remain steady at around 20%.
A potential tariff increase, now awaited for two and a half years, would serve as a major catalyst. Because of high operating leverage, approximately 65% of any incremental tariff revenue will flow directly to EBITDA, Pandey explained, maintaining a “subscribe” rating on the issue.
Separately, Samir Arora, founder of Helios Capital, told Moneycontrol, “Jio is the company that has enabled large-scale digital connectivity and built the network on which India’s new-age companies are built. It’s laid the foundational platform. Jio’s scale is huge, and the potential for consistent growth is high. It is a stock that we would put in the category of high conviction with reasonable returns.”
For the entire discussion, watch the accompanying video
Jio Platforms IPO: Stock needs to appreciate 25% to match Airtel valuation, says Dipan Mehta
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Disclosure: Reliance Industries Ltd, which owns Jio, is the sole beneficiary of Independent Media Trust that controls Network18, the parent company of CNBCTV18.com.