Jio Platforms IPO: Should you buy RIL shares for shareholder quota? Check latest GMP

Jio Platforms is set to launch its initial public offering (IPO) this month and the ongoing buzz suggests that Mukesh Ambani-led digital and telecom major is set to open for subscription between October 21-23. The subsidiary of Reliance Industries Ltd may raise around Rs 31,000-32,000 crore through its IPO. However, any official announcement regarding the issue is yet to be made.

Jio Platforms IPO is set to become India's largest-ever primary offering. Interestingly, shareholders of Reliance Industries, the parent company of Jio Platforms, will also have a reservation in the issue. This means an interested investor, who holds at least one share of RIL, can apply in two categories in the Jio Platforms IPO, including the HNI/retail and shareholders categories.

Who can apply for shareholders category
An investor who holds at least one share of RIL as of the eligibility date specified in the offer documents can apply under the shareholders category. Any investor buying shares after the cut-off date shall not be eligible for the shareholders category. Jio Platforms is said to file its RHP next week. According to sources, it is likely to be filed on October 12.

Should you buy RIL shares for the Jio Platforms IPO?
RIL shareholders may get a reserved quota in the Jio IPO, but heavy oversubscription means owning even one RIL share is unlikely to guarantee an allotment. Investors should therefore not buy RIL solely to chase the Jio IPO, said Harshal Dasani, Business Head at INVasset PMS.

"The key benefit of the listing is that it could establish a market valuation for RIL’s 66.43 per cent stake in Jio. If investors already find RIL attractive on its own merits, the Jio quota is an additional benefit; otherwise, it is essentially a lottery ticket," he said.

On the other hand, Kranthi Bathini, Director of Equity Strategy at Wealthmills Securities, has a different viewpoint. He believes that double application increases the chances of allotment and, considering the mega size, a number of bidders shall get allotment in both the categories.

Bathini believes that Jio Platforms is a portfolio stock and will not be chased for listing pop only. He insisted that investors should apply in two categories in the Jio Platforms IPO only if they are positive on the company in the longer term and can hold the stock despite market volatility.

Jio Platforms IPO GMP and valuations
According to reports, Jio Platforms is likely to seek a valuation of about Rs 11 lakh crore ($114 billion). At the current valuation, Jio Platforms would become India's third-most-valued company, following its parent RIL and arch-rival Bharti Airtel Ltd. It will surpass the likes of HDFC Bank Ltd and ICICI Bank Ltd.

Even before any official announcement regarding the issue, Jio Platforms is currently commanding a grey market premium (GMP) of Rs 175-180 per share. Its GMP has been inching higher, rising from Rs 148-150 apiece. Market sources are expecting a price band in the range of Rs 1,100-1,200 for Jio Platforms, but Business Today could not independently verify these claims.