Reliance Industries Shares Rise 2.7% on Jio IPO Expectations

Reliance Industries Ltd shares rose 2.7% to Rs 1,218 on the NSE on Tuesday, taking the stock's gain over two sessions to 4.3%. The rise came as investors assessed expectations of a Jio Platforms IPO later this month and a higher portfolio weighting for Reliance Industries from Jefferies.

The expected Jio Platforms listing is being watched as a possible way to unlock value within Reliance Industries. A fresh issue of shares by Jio Platforms could help establish a market valuation for the digital business and reduce the discount at which Reliance Industries is valued as a holding company.

Jio Platforms is preparing for an IPO that is expected to open for public subscription from October 21 to October 23, subject to market conditions. The anchor book is likely to open on October 19, while the shares are targeted to list on October 28.

Why Reliance Industries shares rose

Reliance Industries was among the top gainers on the benchmark Nifty on Tuesday. The stock has now gained 4.3% across the past two sessions as the market weighs the possible Jio Platforms IPO and the effect it could have on the value of Reliance Industries.

Vishnu Kant Upadhyay, AVP, Research at Master Capital Services, said a fresh issue of about 2.93% of total equity could enable price discovery for Jio Platforms. He said this could also narrow the holding company discount for Reliance Industries.

Upadhyay said the next move in Reliance Industries shares would depend on several factors, including the valuation assigned to Jio Platforms in the IPO, the quality of subscription, any tariff increases that support average revenue per user, and earnings from the oil to chemicals and retail businesses.

He also said the stock's technical position would matter for its momentum.

The broader interest in brokerage views on Indian stocks has also featured in recent Jefferies stock ratings, although the Reliance Industries development is tied specifically to the group's expected Jio Platforms listing.

Jio Platforms IPO dates and structure

Jio Platforms is the digital holding company of Reliance Industries. It houses Reliance's mobile network business and also has operations in areas such as artificial intelligence, cloud services and enterprise networks.

The IPO is expected to consist entirely of a fresh issue of shares. The proceeds will mainly be used to repay or prepay borrowings of Reliance Jio Infocomm, a Jio Platforms subsidiary.

The planned structure means the IPO could bring a new public valuation for Jio Platforms while directing a large part of the proceeds toward reducing debt within the telecom business.

IPO detail	Information
Expected subscription dates	October 21 to October 23
Expected anchor book	October 19
Target listing date	October 28
Issue type	Entirely fresh issue
Fresh issue size	About 2.93% of total equity
Debt repayment or prepayment	About Rs 27,500 crore
Remaining proceeds	General corporate purposes

The final IPO price and valuation have not yet been decided. A decision is expected in the coming week after considering investor feedback and market conditions.

Jio Platforms has Meta and Google among its major foreign investors. The company also operates businesses beyond mobile services, including AI, cloud and enterprise network services.

What the Jio Platforms IPO could mean for Reliance Industries

The expected IPO matters to Reliance Industries because it could provide a public market valuation for Jio Platforms. At present, the value of the digital business is reflected within the broader Reliance Industries structure.

A fresh issue of roughly 2.93% of total equity would allow investors to establish a market price for Jio Platforms. Master Capital Services said this could narrow the holding company discount on Reliance Industries.

The final effect will depend on the valuation Jio Platforms receives and how investors respond to the issue. Subscription levels could also provide an early indication of demand for the business when it enters the public markets.

The IPO proceeds also have a direct financial purpose. About Rs 27,500 crore is planned for repayment or prepayment of outstanding borrowings of Reliance Jio Infocomm, with the balance intended for general corporate purposes.

Jefferies raises Reliance Industries portfolio weight

Jefferies has also increased the weight of Reliance Industries in its model portfolio. In its October 6 note, the brokerage assigned Reliance Industries a 7.5% weightage in the model portfolio.

Jefferies said the stock was trading at an attractive valuation of 8.4 times its one year forward EV/EBITDA multiple. The brokerage said this was 23% below its 10 year average.

The brokerage also pointed to the possibility of earnings upgrades and higher gross refining margins as reasons for raising the portfolio weight.

This is a brokerage view and does not amount to a recommendation from WeloMoney. Jefferies' assessment needs to be considered separately from the expected Jio Platforms IPO timeline and the actual market response to the issue.

Jefferies' views on other Indian stocks have also covered sectors such as defence, including four defence stocks with Jefferies targets.

Important numbers to track

The Reliance Industries story currently has several figures that investors will be watching as the Jio Platforms IPO moves closer.

The share price ended Tuesday at Rs 1,218, while the stock's two session gain stood at 4.3%. The expected IPO fresh issue is about 2.93% of total equity, and about Rs 27,500 crore of the proceeds is planned for debt repayment or prepayment.

Jefferies' model portfolio now gives Reliance Industries a 7.5% weightage. Its valuation assessment puts the stock at 8.4 times one year forward EV/EBITDA, compared with a 10 year average that is 23% higher.

What investors should watch

The next major event is the expected Jio Platforms IPO decision and its final pricing. The subscription period is currently expected to begin on October 21, with the anchor book likely to open two days earlier.

Investors will also watch:

  - The final valuation and pricing of Jio Platforms
  - Subscription levels during the IPO
  - The use of proceeds for Jio Platforms and Reliance Jio Infocomm
  - Tariff changes and their effect on average revenue per user
  - Earnings from Reliance Industries' oil to chemicals and retail businesses

The final IPO terms remain subject to market conditions. Reliance Industries' share price could also continue to respond to changes in expectations around the Jio Platforms valuation and the broader earnings outlook.

About Reliance Industries

Reliance Industries is the listed parent of the businesses discussed in the source, including Jio Platforms. Jio Platforms houses India's largest mobile network and also has businesses in AI, cloud and enterprise networks.

The expected IPO would give public market investors a direct valuation reference for Jio Platforms. For Reliance Industries shareholders, the valuation and use of IPO proceeds are therefore important developments to track through October.

Frequently asked questions

Why did Reliance Industries shares rise 2.7%?

Reliance Industries shares rose 2.7% to Rs 1,218 on Tuesday as investors assessed expectations of a Jio Platforms IPO and a higher portfolio weighting from Jefferies. The stock's two session gain reached 4.3%.

When is the Jio Platforms IPO expected?

The Jio Platforms IPO is expected to open for public subscription from October 21 to October 23, subject to market conditions. The anchor book is likely to open on October 19, with the shares targeted to list on October 28.

How much of the Jio Platforms IPO will be a fresh issue?

The Jio Platforms IPO is expected to consist entirely of a fresh issue of shares equal to about 2.93% of total equity. The final pricing and valuation have not yet been decided.

How will Jio Platforms use the IPO proceeds?

Jio Platforms plans to use about Rs 27,500 crore of the IPO proceeds to repay or prepay outstanding borrowings of Reliance Jio Infocomm. The remaining funds are planned for general corporate purposes.

What is Jefferies' current weight for Reliance Industries?

Jefferies has raised Reliance Industries' weight in its model portfolio to 7.5%. The brokerage said the stock trades at 8.4 times its one year forward EV/EBITDA multiple, which is 23% below its 10 year average.

What factors could affect Reliance Industries shares next?

Reliance Industries shares could be affected by the final Jio Platforms IPO valuation, subscription quality, tariff changes and earnings from the oil to chemicals and retail businesses. Jefferies has also pointed to possible earnings upgrades and higher gross refining margins.