Jio Platforms listing may unlock value for Reliance shareholders, say experts
The public listing of Jio Platforms Ltd on 28 October could narrow the holding-company discount for Reliance Industries Ltd.
The public listing of Jio Platforms Ltd (JPL) on 28 October provides investors a way to invest directly in telecom and digital services, according to a report by Mint. Analysts suggest the move may trigger a re-rating of Reliance Industries Ltd (RIL) shares by making the value of its stake in the business more transparent.
Piyush Pandey, telecom analyst at Centrum Broking, said the listing has narrowed the holding-company discount from around 30 per cent to approximately 20-25 per cent. With Jio valued at ₹ 13.5 trillion, RIL’s 65 per cent stake translates to around ₹ 8.8 trillion, Pandey said. Applying a 25 per cent discount brings the value attributable to RIL shareholders to approximately ₹ 6.4 trillion.
RIL shares settled 0.6 per cent higher at ₹ 1,306.20, while Jio Platforms shares ended 1 per cent higher at ₹ 1,437 on the BSE on Tuesday. RIL’s market capitalisation has risen to ₹ 17.5 trillion from approximately ₹ 16.15 trillion before the Jio listing.
Vinay Jain, fund manager and head of research at Karma Capital, said separating businesses gives them greater managerial autonomy and strategic focus. However, Eshaan Lazarus, founder and chief executive of 021 Trade, expects RIL to continue trading at a discount due to its dependence on Jio's performance.
In the September quarter, RIL's consolidated revenue rose nearly 30 per cent year-on-year to ₹ 3.3 trillion, while net profit grew 40 per cent to ₹ 25,500 crore. During the same period, Jio Platforms reported 11 per cent revenue growth to ₹ 40,500 crore.