After bumper IPO listing, Jio Platforms shares jump 3% post strong Q2 results | Should you buy, sell or hold?
Jio Platforms share price rose as much as 3% in Monday's trading session after the company reported its first quarterly results on Friday after strong listing last week.
Jio Platforms shares opened at ₹1,465 apiece today, as compared to previous close of ₹1,431 on Friday last week and touched an intraday high of ₹1,475 on 2 November.
The results follow Jio Platforms' stock market debut on October 28, when its shares listed at ₹1,358 apiece, marking a 21.36% premium over the IPO issue price of ₹1,119.
Jio Platforms reported a 14% year-on-year (YoY) rise in consolidated net profit to ₹8,389 crore for the September quarter, marking its first quarterly earnings announcement since its stock market listing earlier this week. The growth was driven by strong subscriber additions, expansion in its digital services business and a modest improvement in average revenue per user (ARPU).
Revenue from operations increased 11% YoY to ₹40,475 crore from ₹36,332 crore in the corresponding quarter last year. On a quarter-on-quarter (QoQ) basis, net profit grew 8% from ₹7,765 crore reported in the June quarter, while revenue registered a 3% increase.
The company's EBITDA rose 17% YoY during the quarter, supported by higher revenue, operating leverage and improved margins. EBITDA margin expanded by 250 basis points to 54.1%. Meanwhile, ARPU edged up to ₹218.8 in Q2, as promotional offers for fixed broadband customers partially offset the benefits of a favourable subscriber mix and increased data usage.
On the operational front, monthly per-user data consumption stood at 44.2 GB, while overall data traffic increased 22% YoY during the September quarter. Monthly subscriber churn remained stable at 1.6%, and Jio added 9.1 million net subscribers during the period.
At the end of September, Jio's 5G subscriber base reached 300 million, marking an addition of 66 million users over the past 12 months. Customer engagement remained robust, with 5G users accounting for 56% of the company's total wireless data traffic.
Brokerage firm Motilal Oswal has reiterated its ‘buy’ rating on Jio Platforms share with a revised target price of ₹1,515, seeing an upside potential up to 6%.
“We reiterate our BUY rating on JPL with a revised TP of INR1,515, premised on DCF-backed ~12.2x FY29 reported EBITDA, driven by higher incremental EBITDA margins and faster-than-expected inflection in FCF,” the firm said.
The brokerage firm further added that near-term share price movements may remain volatile due to the limited free float of less than 3%. However, the brokerage remains structurally positive on the Indian telecom sector, anticipating a smartphone tariff hike of around 15% in the near future.
Meanwhile, Gaurav Garg, Head - Research, Lemonn, believes that Jio Platforms has made a strong entry into the listed market, supported by its dominant position in India's telecom sector and growing presence across digital services, broadband and enterprise solutions. However, after the initial IPO excitement, the key factor for investors will be whether the company can sustain earnings growth and convert its large subscriber base into higher revenue and profitability.
Garg further recommended to to HOLD for existing investors and WAIT for fresh investors, rather than chase the stock after its sharp debut.
“The long-term business outlook remains constructive, but the next leg of share-price appreciation will depend on sustained ARPU improvement, successful monetisation of digital services, margin expansion and consistent cash-flow generation. Since the stock has only recently been listed, its technical history is too limited to establish dependable support and resistance levels; therefore, investment decisions should currently be driven more by business performance, valuation and quarterly execution,” Garg said.
Vaamanaa covers business and stock market news. Started in 2020, she has been producing news on digital platforms for over 4.5 years now. She writes on markets, commodities, IPOs, and industry. She has worked for news channels like Jagran New Media and Business Insider India. You can reach out to her at vaamanaa.sethi@htdigital.in.
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HomeMarketsStock MarketsAfter bumper IPO listing, Jio Platforms shares jump 3% post strong Q2 results | Should you buy, sell or hold?
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