NSE IPO’s retail response offers a litmus test for Jio Platforms: Can it break the mega-IPO jinx?

As Jio Platforms, the digital and telecom arm of Reliance Industries, prepares for what could become India’s largest-ever initial public offering (IPO), the NSE’s recent market debut offers an early test of how retail investors may respond to another mega issue.

Jio Platforms plans to raise capital through a fresh issue of up to 27 crore equity shares with a face value of ₹10 each. The company has yet to disclose the final issue size, but market estimates peg the offering at around ₹37,700 crore, potentially surpassing Hyundai Motor India’s ₹27,858.75-crore issue. The IPO is expected to be launched in November, ahead of Diwali, with the company already meeting investors across the US, Singapore, Hong Kong, London and the Middle East.

According to its IPO papers filed with Sebi, 50% of the issue is reserved for qualified institutional buyers (QIBs), 35% for retail individual investors (RIIs) and 15% for non-institutional investors (NIIs). The entire issue will comprise fresh shares, with the proceeds expected to be used towards debt reduction at Reliance Jio Infocomm.

The structure is similar to NSE’s ₹22,562-crore IPO, which had the same quota for the three investor categories. The only difference was that the country’s largest exchange’s issue was entirely an offer for sale by existing investors, meaning no capital was infused in the company.

The NSE IPO was subscribed 5.71 times overall, with QIBs taking the lead at 12.68 times and NIIs at 6.55 times. Retail investors, however, subscribed 1.39 times, indicating the contrast between institutional demand and retail appetite for a large issue.

“The NSE’s retail response was measured rather than muted in absolute terms, but it was clearly selective,” says Santosh Meena, Head of Research at Swastika Investmart. The issue secured India’s largest-ever retail allocation in absolute value, at around ₹7,800–7,900 crore, but the response remained well below the frenzy typically seen in smaller, growth-oriented offerings.

The reasons were not difficult to identify. NSE was valued at around ₹4.4 lakh crore at the upper price band of ₹1,785, while its 100% OFS structure meant that the company itself would receive no fresh capital. The size of the issue also absorbed a significant amount of liquidity.

NSE’s grey-market premium had also fallen sharply from its pre-IPO levels, reducing expectations of a sizeable listing gain. Concerns around F&O regulation added another layer of caution for investors.

The mega-IPO question

NSE’s debut has added another layer to that calculation. The stock listed on the BSE on September 24 at ₹1,800, a 0.84% premium to its ₹1,785 issue price, giving the exchange a valuation of around ₹4.45 lakh crore. On September 28, the country’s largest exchange shares fell as much as 1.76% to ₹1,761, dragging its market capitalisation to about ₹4.37 lakh crore. The stock is now more than 6% below its listing-day high of ₹1,878.

For retail investors, that post-listing performance matters because the attraction of large IPOs is often tied not just to the underlying business but also to the potential for immediate gains.

Sarvam Goel, Founder of Pocketful, says NSE’s 1.39-times retail subscription reflected several factors moving in the same direction: a less attractive grey-market premium, more than 20 mainboard issues competing for retail liquidity during September, rich valuation and the all-OFS structure.

“The fundamentals didn't help either, a rich valuation and an all-OFS structure raised the bar for an investor base that's usually chasing quick, low-ticket listing pops,” Goel says.

What NSE’s retail response means for Jio

Meena sees the NSE episode as a “partial litmus test” for Jio. Retail investors, he argues, are becoming increasingly sensitive to both valuation and issue structure. Jio’s fresh-issue format and its telecom and digital growth story differentiate it from NSE, but the scale of the offering could still make pricing critical.

“If it arrives with a large absolute size and a premium valuation, it will still need to leave enough ‘money on the table’ and demonstrate compelling medium-term upside to avoid a similarly restrained retail response,” Meena says.

Prathamesh Kadival, Research Analyst at Bonanza, also sees the muted retail response to the NSE IPO as an early signal ahead of Jio.

“The muted retail response to the NSE IPO reads as an early signal ahead of Jio,” says Kadival. “Several factors kept retail away. A modest grey-market premium of about ₹63 signalled limited near-term upside, while a rich valuation and the large ticket size of ₹14,280 added to the caution. Worries around F&O regulation also weighed.”

For Jio, however, Kadival says the read-across is nuanced. Its issue is expected to be entirely fresh, with proceeds going towards debt reduction at Reliance Jio Infocomm (RJIL), rather than providing an exit to existing shareholders. Still, the price and issue size are yet to be announced, and a premium valuation could invite similar scrutiny over value versus potential upside.

Goel also sees a distinction between the two offerings. “Jio's issue is expected to be a fresh raise rather than an OFS, which gives investors a growth story to underwrite instead of just an exit for existing shareholders,” he says.

Yet size itself may remain a hurdle. Goel points to a broader pattern among India’s largest mainboard IPOs, where very large issues have often struggled to generate the same level of subscription as smaller offerings.

“One issue doesn't make a trend, but the pattern behind it is real and it isn't new,” he says. “Retail in India has always been driven by near-term listing gains rather than long-term conviction, and a large, fully priced issue simply offers less of that on a single application.”

For Jio, the final price band, issue size and valuation will therefore be closely watched. While its fresh-issue structure sets it apart from NSE, the scale of the offering and the valuation at which it comes to market could determine the level of retail participation it ultimately attracts, said analysts.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)