Jio IPO strengthens Reliance’s financial flexibility; capex funding remains key: Moody’s

Moody’s analysts Kaustubh Chaubal, Justin Tan and Jacintha Poh described the IPO as credit positive for RIL, which carries a Baa1 rating with a stable outlook. The agency said the principal benefit would be greater funding flexibility rather than a material improvement in leverage or liquidity over the next 12 months.

“The IPO is credit positive for RIL because the proceeds will reduce debt and associated servicing costs,” Moody’s said, adding that the transaction would increase Jio Platforms’ capacity to fund investments in telecommunications networks and digital services without increasing leverage.

Jio Platforms, in which RIL holds a 66.4% stake, launched an IPO of up to 270 million new shares on October 21. The issue is scheduled to close on October 23 and is expected to raise around Rs 30,200 crore ($3.4 billion) at the top of the price band.

The company plans to use up to Rs 27,500 crore ($2.9 billion) of the proceeds to repay borrowings at its wholly owned subsidiary, Reliance Jio Infocomm Ltd. The offer consists entirely of fresh shares, with neither RIL nor its other existing shareholders selling shares.

High capex keeps funding flexibility in focus

The listing comes as RIL prepares to sustain substantial investments across its businesses. Moody’s expects the conglomerate’s consolidated capital spending to remain high at around $15 billion annually over the next two years.

Equity funding at Jio Platforms will help finance part of this investment programme without increasing leverage. The listing will also diversify Jio Platforms’ funding sources and broaden its access to domestic and international capital for future investments, acquisitions and strategic partnerships.

Despite its substantial investment plans, RIL’s credit metrics remain strong. Moody’s forecasts its adjusted net debt/EBITDA ratio at around 1.0-1.2 times over the next two years, well below the agency’s 3.0-times downgrade threshold.

As of March 31, 2026, RIL held around Rs 2.5 lakh crore ($29.3 billion) in cash, cash equivalents and current investments, compared with Rs 1.1 lakh crore ($11.8 billion) in reported current borrowings, including lease liabilities.

Moody’s said RIL’s strong credit metrics and excellent liquidity continued to underpin its credit quality. The IPO’s principal credit benefit, therefore, lies in preserving financial flexibility through a period of heavy capital expenditure rather than delivering an immediate material improvement in leverage or liquidity.

Jio IPO attracts strong subscription demand

According to NSE data cited in a separate subscription update, Jio Platforms attracted bids worth Rs 90,500 crore on the first day, the highest aggregate bid value among Indian IPOs raising more than Rs 15,000 crore.

Including the reported Rs 2.5 lakh crore in anchor-book demand, total demand stood at Rs 3.4 lakh crore.

The reported bid value is substantially higher than the IPO’s expected proceeds of around Rs 30,200 crore at the top of the price band. However, subscription demand is distinct from the capital the company will actually raise and does not, by itself, establish whether the IPO valuation is justified.

For Moody’s, the key consideration is how the fresh equity capital will help Jio Platforms repay debt and finance future investments while limiting additional leverage.

Jio remains central to Reliance’s earnings

Jio Platforms will remain strategically important to RIL after the listing. The digital services business contributed 37% of RIL’s consolidated EBITDA in the financial year ended March 31, 2026, and the parent will retain control following the IPO.

Jio Platforms operates India’s largest telecommunications business, with more than 524 million subscribers, according to Moody’s report.

The final offer structure will determine the extent of dilution in RIL’s ownership and the resulting increase in minority interests. The listing is also expected to enhance transparency and provide a clearer market valuation for RIL’s digital business.

For FY26, Moody’s estimates that RIL generated consolidated net revenue of around Rs 10.8 lakh crore and EBITDA of approximately Rs 2.1 lakh crore. Its businesses span oil-to-chemicals, digital services, retail, media and entertainment, upstream oil and gas, and new energy.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘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 disclaimers here