Stories
Jio Platforms IPO Could Spark Major Stock Re-rating For Reliance And Airtel Says Motilal Oswal
- •Brokerage firm Motilal Oswal has maintained a Buy rating on both Reliance Industries and Bharti Airtel, highlighting their attractive risk-reward profiles.
- •The proposed initial public offering of Jio Platforms could serve as a major catalyst to re-rate both stocks and potentially narrow the valuation gap between competitors.
- •Jio Platforms is reportedly seeking a valuation of around ₹11 lakh crore, which aligns closely with Motilal Oswal's valuation estimate of ₹11.2 lakh crore.
- •Analysts anticipate a potential 15 percent smartphone tariff hike by December 2026, which could further boost the telecom sector.
Key Questions Answered
Jio Platforms is reportedly seeking a valuation of around ₹11 lakh crore ($114 billion) to $128 billion. The IPO will comprise a pure fresh issue of up to 27 crore new equity shares resulting in an equity dilution of about 3 percent, with no offer-for-sale component from existing investors like Reliance Industries.
Motilal Oswal notes that at the proposed valuation of ₹11.2 lakh crore, JPL would be valued at roughly 12 times estimated FY28 enterprise value to EBITDA, compared to 10.3 times for Bharti Airtel's India business. The brokerage believes there is limited justification for Airtel trading at a significant discount to Jio, given Airtel's exposure to additional segments like Indus Towers and Airtel Africa.
Jio Platforms plans to use a substantial portion of the IPO proceeds—specifically up to Rs 27,500 crore—to repay or prepay the borrowings and net debt of its telecom operating company, Reliance Jio Infocomm. The remaining balance from the public offering will be deployed toward general corporate purposes.
