Jio's enterprise value estimates range from ₹8 lakh crore to ₹15 lakh crore; Will Jio turn bigger than RIL in MCap?

Billionaire Mukesh Ambani is eyeing something extraordinary with the initial public offering (IPO) of Jio Platforms Ltd (JPL). JPL’s recent enterprise value (EV), as estimated by analysts at major brokerages, ranges from ₹8 lakh crore to ₹15 lakh crore, and this implies a sizable market valuation for the telecom business post listing and reduction in the market value of parent entity Reliance Industries Ltd (RIL).

The conglomerate has a market capitalisation of ₹21 lakh crore at present, which is the highest among listed entities in India. Following the IPO of the telecom and digital services business, RIL will maintain its position as the umbrella organisation for businesses like refining and petrochemicals, retail, new energy and media.

In the first half of this financial year, RIL posted a profit of ₹52,875 crore on revenue of ₹5.57 lakh crore. JPL’s contribution was a profit of ₹14,485 crore and revenue of ₹83,706 crore.

Brokerage Jefferies has given a higher EV to JPL at ₹15.34 lakh crore and HSBC has also pegged it above ₹15 lakh crore. The lowest EV was given by Nuvama at ₹8.17 lakh crore. Nomura, CLSA and Macquarie valued it at above ₹10 lakh crore. EV is a comprehensive measure of a company's total worth, representing the theoretical cost to acquire it by combining its market capitalisation with net debt.

Jio's comprehensive tech stack spanning radios, network core, operational and business support systems, and fixed wireless access (FWA) solutions is its competitive edge, said Jefferies in its recent report. “With global 5G penetration still low, Jio's cost-effective solutions can help it scale in the $121 billion global telecom technology market, which, in turn, can add to its growth,” the brokerage said. Jefferies quoted the projected equity value of ₹14.2 lakh crore in December 2026 post the reduction of net debt of ₹1.14 lakh crore. ICICI Securities reported a substantial upgrade in growth and valuation prospects for JPL, driven by an improved operational forecast.

Citi Research said the spate of stake sales in JPL and Reliance Retail to high-quality strategic and financial investors, which, along with the rights issue, helped the company deliver on its zero-net-debt target earlier than guided, were impressive achievements. “However, over the last couple of years, capex and net debt have been on the higher side, while refining and petchem performance has moderated. Capex is likely to have peaked over FY24-25 with the completion of 5G rollouts, with capex intensity now expected to decline. The Jul’24 telecom tariff action that was initiated by Jio indicates the shift in its stance towards monetisation, and improves visibility on future tariff hikes,” the brokerage said.

Jio's 2016 launch—offering free voice and rock-bottom data prices—was a shockwave that disrupted the industry and triggered the exit of many players besides hyper-consolidation. Recently, the business witnessed a leadership transition, with the appointment of Akash Ambani as the chairman of Reliance Jio Infocomm in 2022.

RIL holds 66.4% stake in JPL, while tech giants Meta and Google hold 9.99% and 7.73% stakes, respectively, the telecom giant. The remaining stakes are held by private equity giants and sovereign wealth funds.

Ambani recently told a gathering of employees and their families, “At Jio, we are very proud that we have reached the 500 million subscriber mark in under nine years, and we now have over 25 million households. And I am very sure that by next Diwali, we will be 50 and two years from now, we will be 100 million homes that we will serve broadband to every home.”

“What I think Jio has also achieved is—Apple publishes the quality of 5G networks periodically, and in the last report that Apple published globally, Jio is now the highest quality network in the world,” he said. “It is number one in the world.”

“Jio is ahead of China Mobile in China and T-Mobile in the US, and that is what Dhirubhai would have wanted,” he said.