Jio Platforms listing a re-rating catalyst for telecom sector: MOFSL

Motilal Oswal Wealth Management Research Desk said that the listing of Jio Platforms is a significant development for the telecom sector, with potential valuation implications for Airtel and RIL

Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.

 

Motilal Oswal Wealth Management Research Desk

 

The listing of Jio Platforms (JPL) is a significant development for the Indian telecom sector, with potential valuation implications for Bharti Airtel and Reliance Industries (RIL). JPL’s valuation provides a direct benchmark for assessing the relative value of Bharti’s India wireless business and RIL’s stake in JPL. While JPL could command a valuation premium, supported by its market leadership, influence on industry pricing and limited free float, its listing could also create positive valuation spillovers across the sector.

 

Following the recent rally in Bharti Airtel, its India business valuation has converged with JPL’s implied valuation based on the IPO price of ₹1,119 and FY28E reported Ebitda. However, JPL could trade at a premium, supported by its leadership position and free float of less than 3 per cent. A strong listing could further widen the valuation gap, potentially creating room for Bharti’s India business to re-rate. Bharti’s superior free cash flow generation and return ratios, alongside its exposure to Airtel Africa, Nxtra data centres and financial services, provide additional sources of value beyond its domestic wireless business.

 

For RIL, JPL’s listing provides greater visibility into the value of its digital and telecom assets and could act as a catalyst for holding-company value unlocking. RIL holds approximately 66.4 per cent in JPL, and the current valuation implies a holding-company discount of ~29 per cent, compared with the 25 per cent discount incorporated in the sum-of-the-parts valuation. A 20 per cent listing premium for JPL could widen this discount to ~41 per cent, highlighting the potential valuation gap. Beyond JPL, RIL's diversified businesses across retail, energy, new energy, data centres, AI and FMCG provide multiple growth opportunities. Stronger refining and petrochemical earnings, along with a recovery in retail growth and profitability, remain key medium-term triggers.

 

The case for telecom tariff hikes has strengthened, with operators increasingly focusing on monetizing higher data consumption and improving average revenue per user (ARPU). Bharti has discontinued its entry-level ₹299 unlimited data pack and implemented increases in post-paid bundles, while Jio's relaunch of JioPrime membership signals a greater focus on monetization. With the JPL listing and Vodafone Idea's fund-raising plans improving the industry's financial position, a broader tariff hike appears increasingly feasible. The expected smartphone tariff increase has been deferred to March 2027 from December 2026, with an estimated ~15 per cent hike (approximately ₹50 on Jio's ₹299/28-day plan). Discontinuation of unlimited 5G offerings could also support ARPU growth by encouraging higher data-pack consumption.

 

The medium-term outlook for telecom remains constructive, supported by premiumization, rising data consumption, improving ARPU and operating leverage. A potential tariff hike and better monetization of 5G services could strengthen earnings growth, while improving free cash flow generation and value unlocking from digital assets provide additional support. However, the timing of tariff hikes, competitive intensity and the pace of valuation discovery following JPL's listing remain key monitorable.

 

Overall, the sector outlook remains constructive, supported by improving monetization opportunities, potential tariff hikes and the increasing value visibility of digital and telecom assets. Sustained ARPU expansion, disciplined capital allocation and stronger cash flow generation will remain important drivers of earnings growth and valuation performance across the industry. CHECK Stock Market LIVE Updates

 

Bharti Airtel: Target price ₹2,360

 

Bharti Airtel is well positioned to sustain premiumization-led growth, supported by rising postpaid adoption, feature phone-to-smartphone migration, international roaming and increasing data consumption. The company's focus on consumption-linked pricing, upgrades to unlimited plans and higher-value offerings provides multiple avenues for sustained ARPU expansion beyond periodic tariff hikes. The expected ~15 per cent smartphone tariff hike, now deferred to March 2027, could provide an additional boost to revenue growth, while potential discontinuation of unlimited 5G offerings could accelerate monetization of higher data usage. Bharti's strong free cash flow generation and improving balance sheet provide financial flexibility to fund strategic investments in fibre, transport backbone and data centers, while its exposure to Airtel Africa and Nxtra offers additional growth opportunities. We expect continued premiumization, operating leverage and disciplined capital allocation to support earnings growth and improving return ratios. We maintain a positive view on the stock.