Jio Platforms IPO: GMP hits new high; what could drive next phase of growth for telecom major

Jio Platforms is India’s largest digital-connectivity platform. It delivered revenue, EBITDA and PAT CAGRs of 15.8 per cent, 16.2 per cent and 18.5 per cent, respectively, during the FY24-FY26 period, with earnings growth outpacing revenue growth due to operating leverage and improving scale, said SBI Securities.

"Future growth is expected to be supported by tariff rationalisation, migration from 2G to 4G and 5G, higher data consumption, home broadband expansion and increasing enterprise adoption of cloud and digital solutions. Additional monetisation opportunities may emerge from AI-led services, digital applications, satellite connectivity and overseas deployment of its proprietary technology platforms," it said.

Capex pertaining to 5G and other physical infrastructure has already been deployed, and hence, cash flow generation is likely to be healthy going forward. The proposed repayment of RJIL’s borrowings is expected to lower leverage and finance costs, strengthen cash flows and provide financial flexibility for future investments, the brokerage noted.

Jio Platforms carries 60 per cent of India’s wireless data traffic and has the largest 5G customer base outside China. Its network runs on a ‘Made in India’ 5G technology stack developed in-house, including its own 4G+5G core and OSS/BSS systems, along with India’s first fixed wireless service over unlicensed band radio (UBR). Its growth strategy builds on this base, said Emkay Global in a note.

The IPO of Jio Platforms comprises an entirely fresh issue of 27 crore equity shares, with no offer for sale (OFS). Jio Platforms will use the net proceeds for the repayment of its debt. At the current valuation, Jio Platforms is commanding a total market capitalisation of close to Rs 10.30 lakh crore.

Jio commands a 15–17 per cent multiple premium over Bharti Airtel’s India business and Airtel offers superior return on capital employed (ROCE) and higher current ARPU. Focus on structural industry health, pointing out that tariff discipline among Indian telcos has created an ideal market structure for ongoing ARPU hikes, said Swastika Investmart.

However, the brokerage has assigned a 'subscribe' rating, citing Jio's position as a core structural compounder for India’s digital economy, backed by cash generation, declining leverage and home broadband adoption. The brokerage also believes that the Jio Platforms IPO is valued at a FY26 P/E of 33.3 times, 18 per cent below Bharti Airtel’s 40.71 times.

At last check, Jio Platforms was commanding a grey market premium (GMP) of Rs 220-225 per share, suggesting a potential listing gain of around 20 per cent for investors over the upper end of the price band. Jio Platforms is set to make its stock market debut on October 28, Wednesday, on both the BSE and NSE.

"JPL aims to extend mobility leadership via 5G and 2G-to-4G/5G migration, make home broadband its next major growth driver, deepen enterprise and SME relationships through managed services, and offer its in-house tech stack to operators overseas. With a proven execution record and cash generation strengthening as the 5G investment cycle winds down," Emkay said, assigning a 'subscribe' rating.