Jio IPO News : After Jio Financial, Reliance Industries owner Mukesh Ambani can now take IPO of his telecom arm Reliance Jio. Brokerage house Jefferies has said in a report that Reliance Industries Limited’s telecom unit, Reliance Jio Infocom Limited, may have a mega IPO in the year 2025, whose potential valuation will be more than Rs 9.3 lakh crore. Along with this, Jefferies has given BUY rating on Reliance shares and has given a target of Rs 3580.
Jefferies says Reliance Jio could list at a valuation of $112 billion’ and that this could lead to a 7-15 per cent increase in the share price of Reliance Industries.
Why is there a possibility of an IPO coming
According to Jefferies, Jio has been at the forefront of the recent tariff hikes while keeping feature phone tariffs unchanged with a focus on monetisation and gaining subscriber market share. In our view, these moves create a scope for a potential public listing in CY25. RIL may consider an IPO or demerge Jio, as it did with Jio Financial Services (JFS).
IPO: Better Control
With a 33.7% minority shareholding in Reliance Jio, RIL can meet the IPO requirement by listing 10% stake in its telecom arm Jio. Jio has crossed its peak capex phase, so the entire IPO can be an offer for sale by minority shareholders. However, 35% of the IPO is reserved for the retail segment which will require massive mobilization from retail investors. Jefferies says that while RIL will retain majority control after listing, our analysis suggests that the Indian stock market gives a listed subsidiary company a hold discount of 20-50% in the coming times.
Target of Rs 3580 on RIL
The brokerage has maintained a BUY rating on RIL stock with a target price of Rs 3580 per share. This means the stock can grow by more than 13 percent from the last closing price of Rs 3164. RIL’s share price has increased by more than 22 percent since January 1, which is a better performance than the Nifty 50. Nifty has gained 12 percent during this period.
Jio had increased the tariff
In June, Reliance Jio Infocomm announced a series of new tariff plans that will offer unlimited data to users. Jefferies said the tariff move signals the telecom company’s focus on monetisation and gaining subscriber market share. After Jio, peers Bharti Airtel and Vodafone Idea also introduced new tariff plans.