A Jigsaw Puzzle: Why Reliance Jio's IPO buzz isn’t saving RIL stock from a painful year?

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Reports suggest Jio Platforms could be valued at as much as Rs 10.3 lakh crore at the proposed price band of Rs 1,065-1,119 per share. The issue could raise about Rs 30,200 crore at the upper end, with the IPO likely to open for subscription on October 21 and list on October 28, subject to final filings.

So, why are investors looking past the headline size of the IPO. According to analysts, Jio's listing may establish a valuation, but may not immediately unlock enough value for RIL shareholders.

Value unlocking, but when?

Vinit Bolinjkar, Head of Research at Ventura, said Jio's proposed IPO is an important value-discovery event for Reliance Industries, but it may not lead to immediate value unlocking. "At the current valuations being reported, RIL's 66.4% stake in Jio would be worth over Rs 7 lakh crore. However, if only 2.5–3% of Jio is listed, RIL would continue to own the vast majority of the business, meaning investors would still access Jio largely through RIL. As a result, the holding-company or conglomerate discount may persist," he said.

If the free float is small and Reliance remains the dominant shareholder, investors may not treat the listing as a clean separation of value. Instead, Jio may still remain embedded inside the broader Reliance story, which includes telecom, retail, oil-to-chemicals and new energy.

The second non-trigger is valuation. Jio is being positioned as a technology and digital platform company, with businesses across mobile services, broadband, cloud, entertainment, enterprise technology and AI. But investors are still comparing its earnings base with Bharti Airtel’s India telecom business.

Bolinjkar said Jio's proposed valuation at around 12 times forward EV/Ebitda already implies a premium to Bharti Airtel's India telecom business, limiting the scope for a sharp IPO-led re-rating. He added that Jio's lower ARPU compared with Airtel also means further tariff hikes and premiumisation will be needed to drive earnings growth.

That puts the spotlight back on the operating numbers. The IPO may give Jio a listed price, but investors still want to see whether the business can increase ARPU, monetise 5G, deepen broadband, and build profitable digital services beyond connectivity.

Abhinav Tiwari, Senior Research Analyst at Bonanza, said the weakness in Reliance shares shows that investors are focusing on the company's near-term earnings outlook rather than only the IPO excitement.

"The key reason is that investors are looking beyond the IPO excitement and focusing on the company's near-term earnings outlook. Concerns over refining margins, petrochemical profitability and the significant capital required for expansion across businesses are weighing on sentiment," he said.

Tiwari said Jio's listing could unlock substantial value for shareholders, but uncertainty around valuation and the actual benefits for RIL shareholders is limiting immediate enthusiasm. "Moreover, a large part of Jio's potential value may already be reflected in RIL's share price. Overall, the market wants stronger earnings growth, better cash flows and greater clarity on the IPO before assigning a higher valuation to Reliance," he said.

Other business segments still matter

The oil-to-chemicals business remains a major part of Reliance's cash flow, and that business is cyclical. Weak refining margins or petrochemical spreads can offset excitement around Jio. Retail profitability is another monitorable, while new energy remains a long-gestation bet that requires heavy capital spending before meaningful earnings visibility emerges.

Anish Maheshwari, MD and CEO of Vsure Investment Affairs, said an IPO announcement alone is not enough to move Reliance shares. "The market is looking at the bigger picture — how Reliance's core businesses are performing, where earnings are headed and what value the Jio listing will actually unlock," he said.

According to Maheshwari, much of Jio’s growth potential is already known to investors. "What matters now is the valuation, the listing structure and how existing RIL shareholders benefit from it. In my view, the recent correction is less about Jio's potential and more about the market waiting for clarity on numbers, timelines and actual value creation," he said.

Some brokerages are bullish

Religare has a buy rating on Reliance with a target price of Rs 1,696, compared with a current market price of Rs 1,156, implying potential upside of 46.7%. The brokerage argues that the Jio listing could become a structural catalyst for Reliance because it would create an independent public market value for the group’s largest growth asset.

Religare said the proposed IPO represents far more than a routine liquidity event and could become a definitive structural inflection point for group re-rating. Its view is that once Jio has a quoted market value, investors may no longer need to rely on opaque estimates of Reliance’s digital business.

However, the timing of that re-rating is in doubt. Religare's own catalyst map stretches across phases. In the next six months, the Jio IPO filing and anchor allocation could create a visible sum-of-the-parts floor. Over six to 18 months, ARPU increases and debt reduction could support earnings. Over 18 to 36 months, retail operating leverage and new energy scale-up could drive a wider re-rating.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.