The upcoming Jio Platforms initial public offering is poised to unlock significant value for Reliance Industries Ltd. , potentially driving its fair value 15% to 20% higher while strengthening its consolidated balance sheet through substantial debt reduction.
Gurmeet Chadha, Managing Partner and CIO at Complete Circle, views the public issue as a milestone event for Reliance shareholders after three years of stock pressure. On a sum-of-the-parts basis, valuing the 66% stake in Jio, 83% in retail, and assigning $60 billion to $70 billion for the oil-to-chemicals business, the conservative fair value for Reliance Industries sits between $260 billion and $280 billion.
The current market capitalization reflects a 35% to 40% discount to this intrinsic value, Chadha said."The fair value has to be for Reliance at least 15% - 20% higher if not more," Chadha explained, noting that relentless foreign institutional selling and supply pressure on large caps have masked this upside.
While the listing is expected to be decent, a stellar market debut remains a function of shifting broader sentiment, as recent large public issues have seen tepid responses. Read Here | Jio Platforms IPO: Dipan Mehta says issue 'very attractively' priced; opportunity to buy high-growth largecap stock Comparing the telecom giants, Jio's quarterly revenue run rate of ₹40,000 crore is slightly lower than Bharti Airtel's, but it leads with an upward of 53 crore users against Bharti's 48 crore to 49 crore.
Jio also boasts nearly double the broadband penetration. However, Bharti maintains a superior average revenue per user of ₹260 compared to Jio's ₹218, leaving room for future tariff levers. The public issue will also bolster the parent conglomerate's credit profile.
Girish Madan, Director of Natural Resources and Corporate Infrastructure at Fitch Ratings, highlighted that the agency recently upgraded Reliance Industries' local currency rating to A- from BBB+ on expectations of reduced capital expenditure intensity across its oil and gas, telecom, and retail businesses.
The proposed IPO proceeds of around ₹30,000 crore will primarily target debt reduction. The fresh issue proceeds will cut Reliance Industries' consolidated debt by approximately ₹27,000 crore. Fitch projects the company's net debt for the financial year 2027 to be at ₹1,30,000 crore, which will drop to roughly ₹1,00,000 crore following the issue.
Consequently, the net debt-to-EBITDA ratio is expected to improve by 0.15x, falling from an average of 0.7x to 0.55x in FY27. While Fitch does not maintain a public rating for Jio Platforms, the subsidiary's standalone net debt-to-EBITDA is already below 1x and will decline further, positioning it as a very strong credit in the Indian market.
Looking ahead, Jio's evolution beyond pure telecom into a broader digital ecosystem, encompassing artificial intelligence for enterprise automation and satellite internet, will be critical. Demonstrating free cash flow conversion similar to Bharti's ₹40,000 crore to ₹50,000 crore will serve as a key trigger, especially since the quarterly profit after tax difference between the two remains at ₹400 crore to ₹500 crore despite Jio's larger user base.
Over the next five to ten years, the willingness of Gen Z consumers to allocate a larger portion of their income to mobile connectivity could make it easier to pass through future tariff increases.