Jio Platforms IPO: Why Nuvama says Reliance shareholders may not gain much after listing

Jio Platforms IPO: Reliance Industries announced the launch the initial public offering (IPO) of Jio Platforms, the digital arm of  the Mukesh Ambani-led conglomerate in its annual general meeting (AGM) on Friday. However, Nuvama Institutional Equities sees limited gains for RIL shareholders post listing of the company.

"While premium valuation is likely, Reliance Industries shareholder gains may be limited by holding company discount," said Nuvama Institutional Equities in its report following the AGM on Friday. "Jio is also exploring Low Earth Orbit (LEO) satellite network for global scale." 

Jio Platforms is eyeing to raise nearly $4 billion (Rs 37,500 crore) from its maiden stake sale, which shall be entirely a fresh share sale of 27,000 crore equity shares. The issue is said to be India's largest ever IPO, unlocking value for its existing investors like Facebook (Meta), Google, Mubadala, Abu Dhabi Investment Authority, Silver Lake & others, who are staring at 3-4 times returns in six years.

Motilal Oswal expects RJio to remain the biggest growth driver for RIL, with an 18 per cent reported EBITDA CAGR over FY26-28. This growth will be driven by wireless tariff hikes, market share gains, and continued ramp-up of its homes and enterprise offerings. It values RJio at 11.5 times March 28E EV/EBITDA to arrive at an enterprise valuation of Rs 11.3 lakh crore.

However, it has assigned a Rs 74,000 crore valuation to other non-mobility offerings under Jio Platforms to arrive at Rs 12 lakh crore enterprise valuation for RIL’s digital services. "Factoring in net debt and 33.5 per cent minority stake, the attributable equity value for RIL comes to Rs 525 per share," Motilal Oswal added.

Comparing Jio Platforms to its closest peer Bharti Airtel, Nomura said that Airtel also includes its 79 per cent stake in Airtel Africa, 51 per cent stake in Indus Towers. Adjusted for these investments, the implied equity valuation for Bharti Airtel’s India telecom business is Rs 10.6 lakh crore.

"Post the potential Jio IPO, new catalysts to look forward to may come from ramp-up of new energy business and revenue contribution starting FY27; growth of the AI business with 120MW by FY26-end; and potential listing of the Retail business," Nomura added with a 'buy' and a target price of Rs 1,640.

The much-awaited big-ticket Jio Platforms IPO DRHP, will be a fresh issue of around 3 per cent stake, said Emkay Global Financial Services. Reliance Intelligence has entered the execution phase, with 120 MW of compute capacity to be commissioned in Jamnagar by end-CY26, powered entirely by solar energy from its Kutch asset," it said. 

The Jio IPO process has formally commenced, while Reliance Intelligence (AI) is emerging as a fourth growth pillar alongside telecom, retail and energy, said Systematix Institutional Equities. Reliance is entering its next value-creation cycle, it said.

"FY27-FY30 could mark the period when these emerging businesses begin contributing meaningfully to earnings, potentially reshaping Reliance's valuation framework from a traditional energy conglomerate to a diversified technology, consumer and energy transition platform," it added.

Motilal Oswal and Nuvama have a 'buy' rating on Reliance Industries with a target price of Rs 1,655 and Rs 1,765, respectively. Emkay also has the same rating with a target price of Rs 1,680. Systematix has a target price of Rs 1,700 on Reliance with same rating on it.