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Reliance Jio Platforms IPO is India’s biggest ever

Reliance Jio Platforms IPO is India’s biggest ever

The US$3.2 billion IPO of Indian technology and digital services multinational Reliance Jio Platforms has been one of this week’s big business stories, not least because the company's shares rose 27% in its Mumbai debut on Wednesday, making it India's second-largest company by market capitalisation.

Jio's valuation of around US$137 billion also helped to lift the broader Reliance Industries conglomerate's combined market capitalisation to US$320 billion to make it India's top firm, overtaking the Tata Group. This was reported to have been India's biggest IPO ever, topping former record-holder Hyundai Motor India.

The company leads the wireless market too, thanks to its mobile offering. September figures from regulator TRAI suggest that Jio’s wireless mobile subscriber tally is now about 511.1 million, compared with Airtel's 494.3 million, and Vodafone Idea's just over 200 million. BSNL has 94.30 million subscribers.

This means, as Reuters points out, that its user numbers are second only to China Mobile's on the basis of single-country subscribers. Importantly, Jio also has an industry-leading 29 million home broadband customers in India, a number that, unlike mobile, has the potential to increase significantly.

Jio stock may look good right now but, as a recent GlobalData analysis indicates, debt and tax could be issues. Competition and changes to India's telecom rules, including those related to spectrum, licensing and fees, could also have an impact. In addition, Jio is expected to raise subscriber tariffs by about 15% in March.

Of course the IPO has added to the company’s cash pile. Jio apparently plans to use up to US$2.89 billion of the net IPO proceeds to repay the borrowings of its telecoms unit.

Reuters notes that the listing comes during India's Hindu festive season, which builds towards Diwali, a period that is considered auspicious for purchases of gold and other big-ticket items.

However, as the UK’s Financial Times news service says, India’s biggest listing actually came during a downturn in India’s stock market as the war in Iran hits the country’s energy-import-reliant economy, adding that this seems to have been the reason Jio had to lower its valuation target from US$150 billion this summer.

Still, bids for the IPO totalled more than US$78 billion, which is not just a reminder of the continuing desirability of tech stock but also of the success of Jio’s ruthless price war that saw off more than a dozen operators after it entered the mobile market in 2016, bringing with it cheap mobile and data services.

The company now contributes more than a third of Reliance Industries' annual profit. Meta, Google and KKR acquired minority stakes in 2020.

The FT says Jio is now looking to chase growth in a wider array of offerings to consumers, including AI. It also has ambitions to launch satellite broadband services.



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