Jio Platforms IPO: Deven Choksey sees double-return potential in 4-5 years

Choksey said Jio Platforms reported EBITDA of around Rs 76,000 crore last year, with earnings growing at an annual rate of 18-20 per cent. He noted that such a combination of scale and sustained growth visibility is difficult to find among companies. He sees growth opportunities in enterprise services, home broadband, mobility and overseas markets.

Jio Platforms is set to launch its IPO on Wednesday, October 21, and the issue will close for subscription on Friday, October 23. The company will offer its shares in the price band of Rs 1,065-1,119 per share, with a lot size of 12 equity shares. The anchor book will open on Monday, with details expected to be announced later today. The Jio Platforms IPO is entirely a fresh issue of 27,00,00,000 equity shares.

On valuation, Choksey believes the proposed IPO market capitalisation of around Rs 10 lakh crore is relatively attractive, arguing that the company could potentially command a valuation of Rs 12 lakh crore. He said the pricing appears to leave some value on the table for investors, which could also help cushion potential downside risks after listing.

If Jio Platforms sustains growth of around 20 per cent, its EBITDA could double to Rs 1.5 lakh crore over the next four to four-and-a-half years, Choksey said. At the proposed valuation, he believes the company could potentially deliver double returns over four to five years, making it an attractive long-term investment opportunity.

Jio Platforms has reserved shares worth Rs 2,500 crore for eligible shareholders of Reliance Industries Ltd (RIL), while Rs 500 crore worth of shares have been reserved for eligible employees of the company. Of the net issue, 50 per cent is reserved for qualified institutional buyers (QIBs), while retail and non-institutional investors will receive allocations of 35 per cent and 15 per cent, respectively.

Jio Platforms offers attractive long-term growth prospects, supported by sustained revenue growth and improving profitability. Rising average revenue per user (ARPU) and expanding margins indicate improved subscriber monetisation and operating efficiency. A growing subscriber base, higher data consumption and strong customer retention are expected to support revenue growth, Religare Broking said in its note.

"Jio's extensive digital connectivity infrastructure and opportunities in 5G and digital services provide additional growth drivers. Considering its operating performance, business outlook and valuation, we assign a 'subscribe for long term' rating," the brokerage said, citing regulatory dependence for licences and spectrum, delayed approvals, technological developments and emerging competition as key risks.

Jio Platforms IPO was commanding a grey market premium (GMP) of Rs 250-255 per share on Monday, suggesting a potential listing premium of around 22-23 per cent over the upper end of the price band. The GMP stood at Rs 235-240 over the weekend. Jio Platforms shares are scheduled to list on the NSE and BSE on Wednesday, October 28, with the basis of allotment scheduled to be finalised on Monday, October 26.