Jio’s IPO will come, so where’s the concern?
The Jio IPO may not benefit existing Reliance shareholders even though the company may attract high value as ARPUs are expected to rise further
Sep 03, 2025, 11:47 IST3 min
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On August 29, the stock markets absorbed one of the most sensitive news it had been expecting for months: The broad plans for the Reliance Jio listing at the markets. Despite this announcement, the Reliance stock has inched down 1.33 percent to Rs 1,367.5 from the level when the Reliance AGM started.
Concerns of a negative impact for Reliance Industries shareholders, due to a holding company valuation discount, post Jio’s listing, is being debated by analysts. Hence despite the overall unlocking of value, the Jio IPO may not benefit existing Reliance shareholders.
This is because Reliance has chosen for an IPO route and not a demerger of its Jio telecom business. The holding company valuation discount kicks in when a listed company (Reliance) will hold a stake in another listed company (in this case, Jio).
At the AGM, Reliance Industries’ Chairman and Managing Director Mukesh Ambani announced that they were “making all arrangements” to file for a Jio IPO by June 2026.
Jio, which, along with rival Bharti Airtel, battles to gain wireless broadband access across India, has been a frontrunner to launch 5G technology. Jio, which now has over 500 million subscribers, reported an 18 percent y-o-y jump in consolidated revenue to Rs41,054 crore in Q1FY26. For FY25, it reported gross revenues of Rs150,270 crore in FY25 with an EBITDA of Rs64,170 crore for the full fiscal year, led by ARPU of Rs 206.
Concern for Reliance shareholders?
Nuvama Institutional Equities said the Jio IPO will enable major value unlocking. “While Jio may attract higher value, Reliance shareholders may not benefit hugely due to holding company valuation discount,” its analysts said.
Antique Stock Broking President S Varatharajan has called the Jio listing “a very attractive opportunity for all investors”. This is on account of the scale it has achieved through its subscriber base and also over 220 million true 5G users. “We value Jio at $113 billion on 12x 1HFY28 EV/EBITDA-listing likely references 1HFY29 earnings, which can sustain a premium multiple if churn stays contained and ARPU rises,” he said in a latest report.
“Structurally, an IPO keeps Jio as a subsidiary under the RIL fold; investors may apply a holding company discount to the embedded stake. A demerger distributing Jio shares directly to Reliance investors would have been cleaner for value unlocking, though it would also raise questions on leverage, capex funding flexibility, and cross-synergies,” the report adds.
Jefferies analysts say Jio's listing could lead to holding company discount on Reliance that could impact sum-of-the-parts by 7 percent. But it kept its Reliance price target of Rs 1,387.65 unchanged, due to potential re-rating of Jio, in the run-up to its IPO.
Grown through disruptive strategy
Equirus Capital’s managing director and head of investment banking Bhavesh Shah told Forbes India: “It will be a landmark IPO—a play on digital infrastructure and consumer tech for the investor. Jio has grown through a disruptive strategy—by building a huge subscriber base, ensuring low cost of data and boosting digital adoption in India. Jio has been instrumental in broadening tech representation beyond just information technology.”
He adds: “It was never positioned as just a telecom operator, it has scaled through connectivity and used services to add to its subscriber base. The company has added multiple layers, including games and AI, to offer a stronger digital play rather than just being a data service provider. Valuation shall be based on subscriber growth potential, ARPU and monetisation beyond telecom business.”
Balaji Subramanian, vice-president at IIFL Capital Services, said the Jio IPO “has been a long time coming for the telco. Over a third of the company is held by minority investors, out of which a few might be interested in looking for an exit, so it might create a right platform.”
One of the biggest successes for Jio has been garnering 41 percent revenue market share in the four years since its launch in 2020, he further said. “As a data service provider, when the pandemic took place and work-from-home started, the 4G revolution and the ample data allowances which Jio pioneered and the rest of the industry followed ensured that customers could work smoothly.”
One of the biggest challenges for Jio will continue to be monetising 5G technology. Jio has been expanding its 5G-based AirFiber business to drive revenue growth over the past few months.
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