Reliance Jio Listing Likely In Next Year, Valuation Could Be USD 112 Billion

Reliance Jio, one of the largest telecom companies, may be listed in the stock market next year. The valuation of this company of billionaire Mukesh Ambani may be around $112 billion. This will be 7-15 percent more than its parent company Reliance Industries (RIL).

Brokerage firm Jefferies has said in a note that Reliance Jio’s focus is on monetization and increasing the number of subscribers. Recently the company has increased the tariff. However, it has not changed the tariff of feature phones. This note says, “Listing of this company is likely next year.” Reliance may decide to separate Jio or bring an Initial Public Offer (IPO) like Jio Financial Services. Jefferies said the decision to demerge or list will depend on the upside potential of unlocking full value from demerger and balancing the same with a lower controlling stake.

If this telecom company chooses the path of listing, then control over it will be better but for this the holding company will have to give a discount of 20-50 percent and a large retail monetization will be needed. With a 33.7 percent minority shareholding in the telecom company, Reliance Industries can fulfill the requirement of IPO by listing 10 percent stake. However, IPO 35 per cent of the issue is reserved for the retail segment and this will require participation from a large number of retail investors.

Separating Reliance Jio would avoid the holding company discount and benefit RIL shareholders. However, upon listing, the ownership in Jio would come down to 33.3 per cent. Jefferies said that in view of these facts, domestic and foreign investors appear to be in favour of separating Jio for its potential listing. Jefferies believes that if Jio is separated, the fair value of RIL would be Rs 3,580 per share, an increase of about 15 per cent from its current price. The number of Reliance Jio subscribers has grown rapidly in the past few years. The company’s 5G network has reached a large part of the country.