Reliance Jio IPO: How much-awaited IPO likely to impact Reliance share price?

Reliance Jio IPO: The much-awaited initial public offering of Reliance Jio, the telecom and digital arm of Reliance Industries Limited, is likely to comprise entirely fresh equity issuance.

According to media reports, the company may drop the offer for sale (OFS) component amid disagreements with existing investors regarding the IPO valuation and pricing.

Existing shareholders are keen on keeping the issue price as high as possible. However, according to a report by The Economic Times. RIL believes aggressive pricing could hurt retail investors if the stock lists at a loss on debut, it said.

“Reliance Jio is reworking its much-awaited IPO into a fully fresh issue of shares, dropping the earlier plan where global investors would have partially sold their stakes. The trigger? A month-long tussle over pricing. Existing investors wanted a richer valuation to maximise their returns after five years of patient capital. The promoter, on the other hand, wanted breathing room for retail investors to make money after listing,” said Abhinav Tiwari, Research Analyst at Bonanza.

Reliance Jio IPO - What we know so far?

According to the ET report, the telecom major is likely to submit its draft red herring prospectus (DRHP) to SEBI within the next two weeks, although the schedule may shift depending on market conditions. The proposed IPO, which could raise up to $4 billion, is expected to become India’s biggest-ever public offering.

Around ₹25,000 crore from the total funds proposed through the Jio IPO may be allocated towards reducing debt, while the remaining amount could be used for other corporate requirements, as per the report.

Currently, Reliance Industries holds a 67% stake in Jio and is willing to see its shareholding diluted under this structure.

Back in 2020, Jio Platforms had secured ₹1.52 lakh crore from marquee investors such as Google, Facebook (now Meta), Vista Equity Partners, Silver Lake, ADIA, TPG, L Catterton, Saudi Arabia’s Public Investment Fund, General Atlantic, Mubadala, Intel Capital, KKR, and Qualcomm Ventures in exchange for a 32.9% stake.

Currently, Meta owns a 9.99% stake in Jio Platforms, while Google holds 7.73%.

The filing, initially expected as early as March, has been delayed as IPO activity weakened after the conflict in West Asia erupted, dampening investor appetite for new listings.

How is the Jio IPO likely to impact the Reliance share price?

According to Tiwari of Bonanza, this is meaningful but not a fireworks moment. Reliance 67% holding in Jio will get slightly diluted, but it keeps firm promoter control.

“The real story remains value unlocking once Jio trades separately, the market can finally put a transparent price on what's been buried inside the Reliance conglomerate structure. With only a 2.5% float, scarcity could even push Jio to a premium. Expect optimism, not euphoria. The real verdict will come on listing day,” he added.

Meanwhile, Mahesh M Ojha, VP Research & Business Development at Kantilal Chhaganlal Securities, there are several positive triggers for Reliance Industries stemming from the potential IPO of Jio Platforms.

“The listing is expected to unlock significant value and could lead to a re-rating of the business. Fresh capital raised through the IPO would further strengthen Jio’s balance sheet, while Reliance, as the majority shareholder, stands to benefit substantially from the value creation. The proposed offloading is likely to remain limited at around 2.5%, which could help offset concerns related to the holding company discount due to the relatively low free float,” Ojha said.

He further noted that multiple positive triggers are emerging from the IPO, supporting an overall constructive outlook on Reliance Industries.

Reliance share price has remained negative in the near-term. The stock has fallen over 7% in a week and 0.38% in a month. Furthermore, Reliance stock has descended over 15% on year-to-date (YTD) basis and 8% in a year.

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