RIL stock: Jio's listing could unlock value, but will it drive a re-rating?

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Analysts see different opportunities for the two companies. Reliance Industries could see its holding-company discount narrow as Jio receives an independent market valuation, while Airtel could benefit from higher telecom tariffs and improved profitability across the sector.

How Reliance Industries could gain

For Reliance Industries, Jio's listing could provide a clearer valuation benchmark for one of its most valuable businesses and support a reassessment of the conglomerate's overall market value. RIL held 66.43% of Jio Platforms before the IPO and is expected to retain about 64.5% after the fresh equity issue.

At Jio's proposed valuation of Rs 10.3 lakh crore, Reliance's post-issue holding would be worth nearly Rs 6.64 lakh crore. The listing could also help narrow the holding-company discount that investors apply when valuing a parent company's investments in subsidiaries.

This discount reflects the difference between the market value attributed to a company's underlying businesses and the valuation investors assign to the parent. An independently traded Jio share price would give investors a direct reference for valuing Reliance's telecom and digital services holdings.

Reliance also offers exposure to retail, oil-to-chemicals, media and new energy, providing several avenues for future earnings growth and value creation.

Jio's proposed debt reduction could further strengthen the underlying business. The company plans to use up to Rs 27,500 crore of its IPO proceeds to repay or prepay borrowings at Reliance Jio Infocomm, potentially lowering interest costs and improving cash generation.

Jefferies said Reliance Industries has an attractive valuation. The stock is trading at 8.4 times one-year forward EV-to-EBITDA, around 23% below its 10-year average. The brokerage also sees scope for upgrades if refining margins improve.

A stronger Jio balance sheet and higher future earnings could enhance the value of RIL's controlling investment over time.

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%. It 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.

The brokerage 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.

How Airtel could benefit from Jio IPO

Prathamesh Kadival, Research Analyst at Bonanza, believes Airtel is better placed to benefit in the near term, particularly if Jio's listing is followed by tariff increases. "For Airtel, the benefit looks direct, since a listed Jio may push a tariff hike of about 15%, lifting sector earnings," Kadival said.

However, the proposed tariff increase remains a possibility rather than an announced industry decision. Any such revision would depend on the pricing strategies adopted by telecom operators.

A tariff increase across the telecom industry could provide a direct boost to Airtel's average revenue per user (ARPU), revenue and operating profit.

With much of the industry's 5G network investment already completed, higher tariffs could help operators translate increased customer spending into better earnings and cash flows. Airtel is also well-positioned to benefit because of its existing strength in customer monetisation. Its ARPU remains higher than Jio's, reflecting its focus on premium customers and higher-value plans.

Ishan Tanna, Senior Associate at Ashika Capital, said Airtel currently enjoys an advantage in monetisation, with ARPU of Rs 257 against Jio's Rs 214, according to the figures cited in his analysis. He also highlighted Airtel's stronger EBITDA margins and said Jio's valuation at the upper IPO price band appeared reasonable compared with its listed rival.

"At Rs 1,119 per share, Jio Platforms' Rs 10.3 lakh crore valuation at around 34–35x FY26 earnings looks fair, particularly when compared with Bharti Airtel's roughly 35x P/E," Tanna said.

Airtel's existing listed status also gives investors an opportunity to participate in potential improvements in telecom industry earnings without waiting for Jio's stock market debut. Kadival believes Jio's relatively small public float could limit any major movement of investor funds away from Airtel.

With the fresh issue representing about 2.9% of Jio's post-issue equity capital, the number of shares available for public trading immediately after listing will be relatively limited. This could allow Airtel to retain investor interest even as Jio becomes a listed competitor.

Jio Platforms' IPO received a strong response from institutional investors on Wednesday. The Rs 30,213 crore public offering was fully subscribed within 100 minutes of opening, making it the fastest Indian IPO to achieve that milestone.

The public issue was subscribed 3.01 times on the first day, attracting bids for 59.44 crore shares against 19.75 crore shares on offer. Jio had earlier allotted shares worth Rs 8,110 crore to 212 anchor investor accounts and schemes, including LIC, BlackRock and Fidelity.

The IPO, priced at Rs 1,065–1,119 per share, will close on October 23, with Jio shares scheduled to list on October 28.

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.