Jio Platforms IPO: GMP hints at 22% listing gains; what top brokerages say — ratings and key risks

Jio Platforms IPO: The upcoming mega initial public offering (IPO) of Jio Platforms is likely to deliver strong listing gains to investors, if one goes by the latest trends in the grey market premium (GMP), as the issue opens later this week. One should note that the issue will open for anchor investors today, and the details will be released later today.

Following a market holiday on Tuesday, October 20, on account of Dussehra, the Jio Platforms IPO will open for bidding on October 20, Wednesday. Jio will be selling its shares in the range of Rs 1,065-1,119 per share, with a lot size of 12 equity shares and in multiples thereof. The Rs 30,200 crore issue will close for subscription on October 23, Friday.  

Jio Platforms IPO: What grey market premium suggests Jio Platforms has been able to hold its ground in the unofficial market. At last check, the company was commanding a grey market premium of Rs 250 per share, suggesting potential listing gains of more than 22 per cent for investors over the upper end of the price band. The GMP was seen at Rs 220-235 apiece last week and at Rs 190-200 before the price band was officially announced.  

Jio Platforms IPO: What brokerages say Jio Platforms is among India's largest digital platforms. It benefits from a proprietary technology stack, in-house innovation capabilities and substantial investments in 5G, artificial intelligence, cloud infrastructure and digital platforms, strengthening its long-term positioning. Jio is positioned to benefit from India's digital economy, which is expected to expand to Rs 125.8 lakh crore by FY31, said Chola Securities.

"Strong promoter backing and synergies within the Reliance ecosystem enhance distribution reach, customer acquisition capabilities and cross-selling opportunities. The stock is valued at 32 times FY27E earnings, representing a discount of 12-15 per cent to its nearest listed peer. We believe the AI-led services opportunity can trigger a narrowing of this discount," it said, assigning a 'subscribe' rating.

Jio Platforms is positioned to capitalise on India’s growing digital economy, extensive pan-India connectivity and 60 per cent share of wireless data traffic. It has delivered strong financial performance, with revenue and EBITDA growing at CAGRs of 15.8 per cent and 17.8 per cent, respectively, during FY24-FY26, alongside a healthy EBITDA margin of 51.91 per cent, said KC Securities.

Its proprietary technology stack, 7,220 patent applications and investments in 5G, cloud and AI provide a competitive advantage and potential for long-term, innovation-led growth. Rising data consumption, tariff hikes, ARPU improvement and expansion in JioFiber, JioAirFiber and enterprise digital services offer additional growth opportunities, it added, assigning a 'subscribe' rating for the long term.

Jio Platforms is well positioned for long-term growth, supported by its 5G infrastructure, digital ecosystem and AI-led services. Normalising capital expenditure could improve free cash flow, said SMC Global. "Expansion in fixed wireless access, enterprise cloud solutions and international technology monetisation could support future growth, subject to effective execution," it said, expressing a positive view.

Among other brokerage firms, Arihant Capital Markets, Emkay Global Financial Services, Swastika Investmart and Ventura Securities are also positive on the issue. They have also suggested subscribing to the issue for the long term, citing its strong parentage, market leadership, growth prospects and execution record.  

Jio Platforms IPO: Key risks ICICIDirect Research has cited a mobile broadband market share of 49.8 per cent and a fixed broadband share of 43.3 per cent, making Jio the market leader in India’s digital connectivity market. It also highlighted consistently improving EBITDA and PAT margins as key strengths. Jio, with its presence across diversified segments, offers exposure to India's digital economy growth, it said, without assigning a rating to the issue.

However, key risks include the potential obsolescence of Jio’s infrastructure and the substantial capital required to adopt next-generation technologies. Satellite broadband could intensify competition, particularly in coverage-gap areas. Jio’s unified licence is due for renewal in October 2033, while most of its spectrum expires within 16 years. Its systems and third-party vendors also face cybersecurity threats.

SMC Global has flagged regulatory changes involving AGR and spectrum charges, heavy dependence on Jio, sole distribution through RRL, intense competition and cybersecurity risks as key concerns. KC Securities has also cited regulatory changes, competitive pressures and high capital expenditure as key risks.