Jio Platforms IPO Valuation Estimated at ₹11 Lakh Crore
Motilal Oswal projects significant value unlocking for Reliance Industries with the upcoming Jio Platforms IPO.
Jio Platforms' potential valuation aligns with Motilal Oswal's estimate of ₹11.2 lakh crore.
Reliance Industries' stock reflects an 18-36% holding-company discount on its Jio stake.
The IPO is expected to influence telecom pricing and support earnings growth for Jio and Bharti Airtel.
The anticipated initial public offering (IPO) of Jio Platforms could significantly enhance the value of Reliance Industries Ltd (RIL), as per a report from Motilal Oswal Financial Services. The brokerage firm indicates that RIL's current market price incorporates a substantial holding-company discount related to its investment in the digital sector.
Motilal Oswal estimates Jio Platforms' equity valuation at approximately ₹11 lakh crore, closely aligning with its own valuation of ₹11.2 lakh crore. At this valuation, Jio Platforms is projected to trade at around 12 times the estimated EV/EBITDA for FY28. The report highlights that RIL's stock price currently reflects an 18-36% discount due to its 66.4% stake in Jio Platforms, depending on the valuation multiple applied to Reliance Retail Ventures Ltd (RRVL).
The brokerage's analysis suggests that if RRVL is valued at 20 times the estimated EV/EBITDA for September 2028, RIL's valuation implies a discount of about 36% on its stake in Jio Platforms. Conversely, a more conservative valuation of 15 times would reduce this discount to approximately 18%. Motilal Oswal values RIL's stake in Jio at around ₹7.45 lakh crore, translating to ₹550 per share before a 25% holding-company discount, which adjusts the attributable value to ₹413 per share for RIL.
The Jio Platforms IPO is expected to have broader implications for the telecom sector, particularly in pricing strategies. Motilal Oswal anticipates that the IPO, coupled with a potential tariff increase, could lead to a re-rating for both Jio and Bharti Airtel, driven by stronger earnings growth. The brokerage also notes that delays in tariff hikes have adversely affected the stock performance of RIL and Bharti Airtel this year.
Looking ahead, Motilal Oswal maintains a 'Buy' rating on RIL, setting a target price of ₹1,530 per share based on a sum-of-the-parts valuation. This valuation includes ₹418 per share for oil-to-chemicals and exploration businesses, ₹174 for new energy, and ₹505 for Reliance Retail. The brokerage expects Jio's revenue to reach ₹1.69 lakh crore with an EBITDA of approximately ₹95,700 crore by FY28, projecting an EBITDA margin increase to 56.6%.
