Jio IPO could trigger re-rating for Reliance
What's the story
The proposed IPO of Jio Platforms could significantly benefit Reliance Industries Ltd (RIL), says Motilal Oswal Financial Services. The brokerage firm believes that RIL's current market price already accounts for a major holding-company discount on its digital business stake. They estimate a potential equity valuation of about ₹11 lakh crore for Jio Platforms, which is in line with their own valuation of ₹11.2 lakh crore.
Valuation impact
Current valuation suggests a holding-company discount of around 36%
Motilal Oswal's analysis shows that if Reliance Retail Ventures Ltd (RRVL) is valued at 20 times its estimated EV/EBITDA for September 2028, RIL's current valuation suggests a holding-company discount of around 36% on its stake in Jio Platforms.
However, this discount could be lower at a more conservative multiple of 15 times for the retail business.
Market expectations
'Buy' rating on RIL with ₹1,530 target price
Motilal Oswal also expects the Jio Platforms IPO and a possible tariff hike to trigger a re-rating for both Jio and Bharti Airtel.
The brokerage firm believes that stronger earnings growth will further support these telecom companies.
They have maintained their 'Buy' rating on RIL with a target price of ₹1,530 per share, based on its sum-of-the-parts valuation.
Pricing implications
Motilal Oswal predicts 15% tariff hike in December 2026
The brokerage firm also anticipates that the Jio Platforms IPO will impact telecom-sector pricing.
They believe that delays in tariff hikes have contributed to the lackluster performance of RIL and Bharti Airtel shares this year.
However, after the Jio Platforms IPO and Vodafone Idea's upcoming fundraise, Motilal Oswal thinks another tariff hike could be on the cards, predicting a 15% tariff increase in December 2026.