Reliance Jio IPO at Rs 10 lakh crore valuation: What analysts see in the price band

ETMarkets.com

Jio Platforms has fixed the price band at Rs 1,065-1,119 per share for its mega IPO, valuing the company at about Rs 10.3 lakh crore at the top end. The issue comprises a fresh sale of up to 27 crore equity shares, which means Jio could raise Rs 28,755 crore at the lower end and about Rs 30,213 crore at the cap price.

The IPO will open for public subscription on October 21 and close on October 23, while anchor investor bidding is scheduled for October 19.

The valuation puts Jio among India’s most valuable companies even before listing and make it the largest IPO in Indian market history, surpassing Hyundai Motor India’s Rs 27,900 crore issue in 2024. For investors, however, the real debate is whether Jio’s pricing leaves enough on the table for listing gains.

How do analysts see the IPO valuation?

Analysts are broadly calling the valuation fair. The common view is that Jio's market leadership, subscriber base, 5G opportunity, broadband push and digital ecosystem justify a premium. The caution is that much of that growth is already being priced in.

Abhinav Tiwari, Senior Research Analyst at Bonanza, said Jio’s valuation at the upper band works out to about Rs 10.30 lakh crore and roughly 33.5 times trailing 12-month earnings. "Based on its TTM earnings, the company is valued at 33.5x PE, which appears fair to mildly conservative compared with Bharti Airtel," he said.

That comparison with Airtel will be central to how investors judge the issue. Tiwari said Bharti Airtel trades at 38.9 times trailing earnings, compared with Jio’s 33.5 times, implying that Jio is available at a 14% discount to Airtel. Some discount is justified, he said, because Jio’s first-quarter FY27 profit grew 9.2%, much slower than Airtel’s 37.3% growth.

The gap in average revenue per user also matters. Jio's mobile ARPU stands at Rs 215.6, against Airtel's Rs 264, according to Bonanza’s estimates. That makes Jio cheaper on current earnings, while also leaving space for future earnings growth if tariffs rise.

"Overall, the pricing appears fair to mildly conservative rather than deeply undervalued. The valuation offers moderate upside, provided earnings growth improves and tariff hikes support profitability," Tiwari said.

Paresh Bhagat, Chairman of Mangal Keshav Financial, said the IPO pricing looks reasonable when measured against Jio’s FY26 earnings. At the upper price band, he said, Jio Platforms would command a post-issue market capitalisation of about Rs 10.3 lakh crore, implying a price-to-earnings multiple of around 34.6 times FY26 consolidated earnings of Rs 30,049 crore.

"We view the pricing as reasonably fair, with a relatively conservative approach compared with earlier valuation expectations, rather than an outright bargain," Bhagat said.

Jio's IPO valuation has come below the most aggressive estimates that had earlier floated in the market. Expectations had at one point gone as high as $170 billion, while the current valuation is closer to $108 billion.

The reset may help sentiment because IPOs priced too aggressively often struggle after listing. At the same time, a fair valuation can limit the sharp first-day upside that retail investors usually look for in a marquee issue.

Dr Ravi Singh, Chief Research Officer at Master Capital Services, said Jio's pricing looks fair rather than conservative. "Investors are already paying for a significant part of Jio’s future growth. At around 34 times earnings, the IPO does not look obviously cheap, especially considering competition, the need for continued investment and uncertainty around future earnings growth," he said.

Singh said Jio’s strong position in telecom, large subscriber base and growth opportunities in 5G, home broadband and digital services justify a premium valuation. But he added that the issue may not offer a large margin of safety for investors looking for bargain valuations or substantial listing gains.

The other valuation lens is EV/Ebitda. Vinit Bolinjkar, Head of Research at Ventura, said Jio’s proposed valuation at around 12 times forward EV/Ebitda already implies a premium to Bharti Airtel’s India telecom business. That, he said, limits the scope for a sharp IPO-led re-rating.

"Jio’s lower ARPU versus Airtel also suggests that further tariff hikes and premiumisation are needed to drive earnings growth," Bolinjkar said.

For Reliance Industries shareholders, the IPO is still a major value-discovery event. At a Rs 10.3 lakh crore valuation, RIL’s 66.4% stake in Jio would be worth close to Rs 7 lakh crore. The RHP also sets aside shares worth up to Rs 2,500 crore for eligible Reliance Industries shareholders and up to Rs 500 crore for eligible employees, giving existing RIL investors a separate route to apply for the issue. The Financial Express

Yet Bolinjkar said the listing may not immediately remove the holding-company discount in Reliance Industries. If only 2.5-3% of Jio is listed, Reliance will still own the vast majority of the business. Investors would continue to access Jio largely through RIL, unless they get allotment directly in the IPO.

IPO background

The IPO is entirely a fresh issue, which means existing investors such as Reliance Industries, Meta, Google, Mubadala and Saudi Arabia’s Public Investment Fund are not selling shares. The proceeds will go to Jio Platforms. That structure may help investor comfort because the issue is not an exit route for existing backers.

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.