RIL rises 3% as Jio IPO date out; what does it mean for shareholders?

India's largest telecom operator, Reliance Jio, will launch its IPO on October 21 at a price band of ₹1,065-1,119 per share.

Reliance Industries share price: Shares of India's most valuable company, Reliance Industries (RIL), jumped nearly 3 per cent on Thursday after its telecom arm, Jio Platforms, announced the date for its much-awaited initial public offering (IPO). The listing is expected to pave the way for re-rating for Reliance and unlock shareholder value.

 

Owned by Indian billionaire Mukesh Ambani, Reliance shares have been buzzing this week in anticipation of India's biggest public offer, having risen in three of the four trading sessions this week.

 

RIL stock price rose 2.85 per cent to the day's high of ₹1,209.50 on the BSE, as against the last closing price of ₹1,175,95. The oil-to-telecom behemoth has risen 4.35 per cent during the three days.

 

 

India’s largest telecom operator Reliance Jio will launch its IPO on October 21 at a price band of ₹1,065-1,119 a share. The IPO is set to become India’s largest, with Jio Platforms seeking to raise ₹30,213 crore at the upper end of the price band, thus valuing it at about ₹10.3 trillion. The offer is entirely a fresh share sale. 

 

 

RIL currently holds 66.43 per cent in Jio Platforms, while Meta and Google hold 9.98 per cent and 7.73 per cent, respectively.

 

"Reliance held 66.43 per cent before the issue and, with the new shares diluting it to roughly 64.5 percent, its stake is worth about ₹6.6 lakh crore at the band, close to two-fifths of Reliance's own market value," said Harshal Dasani, business head at INVasset PMS.

 

The IPO, according to Centrum Broking, is expected to unlock value for RIL shareholders through a market-discovered valuation of Jio’s telecom and digital businesses.

 

For RIL, after the JPL IPO, there would be a case for a holdco discount on its stake. However, Motilal Oswal Financial Services, earlier this week, said that it believes at the current market price, the stock price is already factoring in ~18-36 per cent holdco discount for RIL’s ~66.4 per cent stake in the telecom arm.

 

"While investors who invested in RIL for its digital services will now have an option to gain direct exposure through JPL, RIL will remain a play on India’s largest retailer, India’s largest integrated energy company, and several other growth optionality," said the brokerage. 

 

Earnings upgrade on the back of stronger refining/petchem cycle, recovery in retail revenue growth and profitability remains the key medium-term trigger for the stock, it added.

 

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.