Jul 11, 2024 10:41 AM IST
Jio ‘could list at $112 billion valuation’ and add ‘7-15 percent upside’ to the Reliance Industries share price, Jefferies said.
Reliance Jio- the telecom unit of Reliance Industries Ltd- could be headed for a major initial public offering (IPO) in 2025. The potential valuation of the listing could be more than ₹9.3 lakh crore, Jefferies said in a note. Jio ‘could list at $112 billion valuation’ and add ‘7-15 percent upside’ to the Reliance Industries share price, the brokerage said.
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“Jio leading the way in the recent tariff hikes unlike in the past while keeping feature phone tariffs unchanged shows focus on monetization and subscriber market share gains. These moves create a case for a possible public listing in CY25 in our view,” it said.
For Jio listing, the company has two options- one is IPO and the second is a spin-off like Jio Financial Services (JFS).
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“Their primary concern is the holdco discount of 20-50% in India but steeper (50-70%) for conglomerates in Korea and Taiwan. The large retail investor mobilization in the case of an IPO is another concern. The lower controlling stake in Jio on spin-off could be addressed by buying a part of the shares offered by private equity funds after the spin-off,” Jefferies said in the report.
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It added, “This would avoid the holdco discount and enable better value unlocking benefiting RIL shareholders. The owner’s stake in Jio would fall to 33.3% on the listing. We note the owner’s stake in the recently spun-off JFS was 45.8% on the listing. The strong performance of the stock prices of RIL and JFS since the event, as well as the less than majority stake of the owners in JFS, may tilt the owner to adopt the spin-off route for Jio.”
