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Jio Platforms IPO Could Unlock Value At RIL And Drive Re-Rating Says Motilal Oswal
- •Motilal Oswal Financial Services believes a proposed IPO of Jio Platforms could unlock significant value for Reliance Industries Ltd and drive a stock re-rating.
- •The brokerage notes that RIL's current market price factors in a holding-company discount ranging from 18 to 36 percent on its stake in Jio Platforms.
- •Motilal Oswal values Jio Platforms at around Rs 11.2 lakh crore and has reiterated its Buy rating on RIL with a target price of Rs 1,530 per share.
- •The upcoming IPO and potential future tariff hikes are expected to support stronger earnings growth and boost sentiment for telecom operators like Jio and Bharti Airtel.
Key Questions Answered
Motilal Oswal values Jio Platforms at around Rs 11.2 lakh crore, or about $117 billion, which translates to roughly 12.1 times FY28 estimated EV/EBITDA. RIL's 66.48 percent stake in Jio is valued at approximately Rs 7.45 lakh crore before applying a 25 percent holding-company discount, resulting in an attributable value of Rs 413 per RIL share.
The proposed Jio Platforms IPO is expected to exceed Rs 37,000 crore, potentially making it India's largest public issue. The offering consists entirely of a fresh issue of up to 27 crore new equity shares with no offer-for-sale component.
A substantial portion of the IPO proceeds is earmarked for debt reduction, with plans to use up to Rs 27,500 crore (or about $3.3 billion) to repay or prepay borrowings of its telecom subsidiary, Reliance Jio Infocomm. The remaining funds will be allocated for general corporate purposes.
