The biggest company of the Indian Stock Market - Reliance Industries, under the leadership of Mukesh Ambani, is expected to unveil the much-anticipated Jio IPO at its upcoming annual general meeting (AGM) in August, 2024. The upcoming IPO has let all investors in anticipation and is said to be one of the largest in India's history, surpassing the state-owned Life Insurance Corporation of India’s (LIC) listing. Let’s us dive into details and read on the lines of the expectations to evaluate how this IPO might prove to be a changing point in the investors’ portfolio as the portfolio of the Indian Stock Market.

About Reliance Jio

Reliance Jio, a subsidiary of Reliance Industries Limited (RIL) launched in 2016, has rapidly become India's largest mobile network operator and the third largest globally by subscriber count. Known for its aggressive pricing strategy, Jio revolutionized the Indian telecom market with free voice calls and affordable data plans, quickly amassing over 100 million subscribers within six months of launch. Jio boasts extensive 4G LTE network coverage and a robust digital ecosystem, including JioTV, JioCinema, and JioSaavn. In 2020, Jio Platforms attracted over $20 billion in investments from global tech giants like Meta and Google. Leading India's 5G rollout, Jio invests heavily in spectrum acquisition and infrastructure development. Financially, Jio focuses on increasing its average revenue per user (ARPU) and return on capital employed (ROCE). Future plans include accelerating 5G network expansion, growing its digital services portfolio, forming strategic partnerships, and committing to sustainability initiatives.

Open Demat Account with us to start investing!

Recent Developments

In a strategic move, Jio recently implemented a tariff hike, increasing the prices of its prepaid plans by up to 25%. This was followed by similar price increases from rivals Airtel and Vi. Additionally, Jio has shifted its unlimited 5G benefits to premium plans that offer users 2GB or more data per day. This strategy aims to enhance the company’s average revenue per user (ARPU), making its shares more attractive to potential investors. Based on the latest tariff hike and 5G monetisation, and 5G monetisation efforts, Jefferies valued Jio at a staggering $133 Billion (INR 11.11 Lakh Crores) further boosting its chances of being the biggest IPO in India since LIC.

Details of the Jio IPO

Under current regulations, companies valued at ₹1 lakh crore or more must sell at least 5% during an IPO. Jio, valued at $133 billion (₹11.11 lakh crore) by Jefferies, would need to sell a 5% stake, amounting to approximately ₹55,000 crore, significantly surpassing LIC’s ₹21,000 crore IPO. Should Reliance Jio go public, it will set a new record as India’s largest stock market listing. Reliance Industries (RIL) is reportedly considering a valuation of around $100 billion for Jio, with the IPO featuring a substantial offer-for-sale (OFS) component. Earlier at the start of the financial year – Hyundai Motors India had planned to go public with an offer of INR 25,000 Crores, speculating it to becoming India’s biggest IPO.

Jio's Tariff Hikes and 5G Monetization to Boost ARPU

The recent tariff hikes and revenue from the 5G business are expected to significantly boost Jio's ARPU, a critical performance metric for telecom companies. This increase in ARPU is anticipated to make Jio more appealing to investors ahead of its share sale. Notably, Jio's ARPU had remained stagnant at ₹181.7 for three quarters until March 2024.

Upcoming IPOs to watch: Apply and invest in the future!

Before proceeding with the IPO, Jio likely aimed to improve its ARPU and ROCE (return on capital employed) metrics to enhance shareholder value. Concerns about monetizing 5G through mobile plans have been mitigated as Jio's fixed wireless access (FWA) business gains momentum, creating additional value for investors.

Reasoning for Jio IPO

Since its launch in 2016, Jio rapidly gained a substantial subscriber base through competitive pricing. Plans to enter the equity markets were reportedly postponed in 2020 after 13 foreign investors, including Meta (9.9%) and Google (7.73%), invested, valuing Jio at around $57-64 billion. A significant factor in the current IPO decision is the opportunity for private equity (PE) and other investors, who contributed over $20 billion in 2020, to exit their investments.

The telecom industry is capital-intensive, involving significant costs for spectrum acquisition and infrastructure development. Jio has allocated a substantial portion of its ₹53,000 crore capital expenditure to its 5G rollout. Reliance Industries Limited (RIL) plans to reduce capex, with most funding expected to come from internal accruals.

Stakeholders in Jio Platforms Ahead of Potential IPO

Mukesh Ambani-led Reliance Industries Ltd (RIL) holds a 67.03% stake in Jio Platforms Ltd, which encompasses Reliance's telecom and digital assets. The remaining 32.97% is owned by strategic investors Meta and Google (17.72%), and global private equity investors such as Vista Equity Partners, KKR, PIF, Silver Lake, L Catterton, General Atlantic, and TPG (15.25%).

The anticipated Jio IPO is set to be a historic event in India's stock market, potentially becoming the largest listing the country has ever seen. With a significant valuation and strategic moves to boost ARPU through tariff hikes and 5G monetization, Jio is positioning itself as an attractive investment opportunity. The IPO will provide an exit for private equity investors and others who have heavily invested in Jio since 2020, while Reliance Industries plans to leverage internal accruals to fund future growth. As Jio continues to expand its 5G network and improve its financial metrics, the upcoming IPO promises to be a significant milestone for the company and its stakeholders.

Financial Calculators: SIP Calculator | SWP Calculator | Compound Interest Calculator | EMI Calculator | FD Calculator | Retirement Calculator | Option Value Calculator | Inflation Calculator | Lumpsum Calculator

Popular Stocks: ICICI Bank Share Price | HDFC Bank Share Price | CDSL Share Price | UPL Share Price | TCS Share Price | BHEL Share Price | Trident Share Price | IRFC Share Price | Adani Power Share Price