Reliance Jio's Rs 40,000 Crore IPO. Will it Widen the Gap With Peers?

If you thought 2024 was a blockbuster year for IPOs, then get ready because 2025 is shaping up to be even bigger.

Some of India's most recognised brands and industry giants are gearing up to hit Dalal Street and excitement is building among investors.

Among the most anticipated listings is Reliance Jio, which could potentially launch India's largest IPO in history, making waves across the market.

But that's not all, LG Electronics India is finally preparing for its public debut, while Zepto, the quick-commerce startup that redefined how India shops, is also set to make its mark.

With so many high-profile companies planning their market entry, investors are eagerly watching for opportunities to capitalise on this IPO boom.

With all eyes are on Reliance Jio, let's take a closer look at what makes this IPO so significant.

About Reliance Jio

Launched in 2016, Reliance Jio revolutionised India's digital landscape by making high-speed internet and advanced digital technologies accessible to millions at affordable rates.

Jio played a pivotal role in transforming how India engages with the digital world. Before Jio's entry, India ranked 155th globally in mobile data consumption.

But in no time at all the country surged up the list, surpassing nations like the US and the UK in mobile broadband usage. This transformation marked a significant turning point in India's digital journey.

What Makes Reliance Jio So Special?

• Jio is not just India's largest telecom provider but also ranks as the second-largest single-country operator in the world.
• As of October 2024, Jio's wireless customer base reached 470 million.
• Over the past five years, Reliance has invested around Rs 260 bn in its telecom, internet, and digital businesses, ensuring robust infrastructure and cutting-edge services.
• Its impact extends beyond mobile connectivity, offering a diverse range of services such as fiber internet, mobile devices, digital applications, and enterprise solutions.
• Jio's innovative approach and large-scale infrastructure have positioned it at the forefront of India's digital revolution, making it a key player in the global telecom and technology space.

IPO Size and Valuation

Reliance Jio, the telecom arm of Reliance Industries Limited (RIL), is gearing up for a landmark IPO, with reports suggesting that the process has already begun.

According to sources, Mukesh Ambani, Chairman of RIL, is planning to raise Rs 350-400 bn through the IPO, making it one of the largest fundraising events in India's corporate history.

IPO Timeline

Reliance Jio is expected to debut on the stock exchange in the second half of 2025. If the company successfully proceeds with the proposed IPO size, it will surpass all previous listings, setting a new record as India's biggest IPO.

The company is already in discussions with potential investors for a pre-IPO placement to ensure a strong market response.

For perspective, the largest IPOs in India so far include Hyundai Motors, which raised Rs 278.7 bn in October 2024, followed by Life Insurance Corporation (LIC), which launched an IPO worth Rs 210 bn in 2022.

If Jio achieves its planned fundraising target, it will comfortably outshine these past records.

A Close Look at the Financials

Reliance Jio has seen steady growth in its financial performance, driven by tariff hikes and expanding user engagement.

The company's revenue rose by 7% YoY to Rs 283.4 bn in the September 2024 quarter, up from Rs 264.8 bn in the prior year's corresponding quarter.

In Q2 FY25, Jio's net profit surged 14% YoY, reaching Rs 62.3 bn, compared to Rs 54.5 bn in the same quarter of the previous year.

Jio's EBITDA grew by 8% YoY, reaching Rs 150.4 bn, with a healthy EBITDA margin of 53.1%.

Meanwhile, Average Revenue Per User (ARPU) climbed to Rs 195.1 following a price hike in July 2024, breaking a stagnant trend where ARPU remained at Rs 181.7 for three consecutive quarters.

Jio's Q2 FY25 earnings report, released on 14 October 2024, reaffirmed its strong financial momentum.

Peer Comparison

Airtel, one of the world's top three telecom giants, remains Jio's biggest challenger.

With a market cap of Rs 10.4 trillion (tn) and a net profit of Rs 77.5 bn in H1 FY25, it continues to expand aggressively, rolling out fiber and 5G networks and reinforcing its infrastructure for major events like the Maha Kumbh.

Despite some user churn from tariff hikes, Airtel stands strong in India's telecom battlefield.

Tata Teleservices, though much smaller in scale, focuses on niche enterprise solutions, with a market cap of Rs 121 bn.

Vodafone Idea, backed by Vodafone Group and Aditya Birla Group, is fighting hard to stay relevant. With a market cap of Rs 535.6 bn, Vi is set to launch 5G in March 2025 and has introduced new annual plans.

Meanwhile, BSNL, the government-owned telecom player, continues to serve over 107.9 m users with 3G and 4G broadband services.

Despite its reach, it lags behind in network expansion and high-speed connectivity, struggling to match Jio's cutting-edge 5G infrastructure.

Reliance's Past Listings

Reliance has a track record of successful demergers and listings. In 2023, Reliance Financial Services was spun off from Reliance Industries, marking a significant restructuring.

Upon listing, its share price under the price discovery mechanism was set at Rs 261.85. On 21 October 2023, Reliance Financial Services debuted on the Bombay Stock Exchange (BSE) at Rs 265 and the National Stock Exchange (NSE) at Rs 262.

Since its listing, the stock has delivered steady returns, reaching Rs 304 in just a year.

With Reliance Jio's strong financials, massive customer base, and a history of successful market entries, the upcoming IPO is poised to be a game-changer in India's capital markets.

Conclusion

According to the India Brand Equity Foundation (IBEF), India's wireless subscriber base reached Rs 11.7 bn in May 2024, with Reliance Jio maintaining its leadership position by capturing a 40.6% market share and a massive 4.7 bn user base.

At the same time, India's e-commerce sector is on an upward trajectory, expected to grow to US$ 325 bn by 2030, with the quick commerce segment alone projected to hit US$ 19.9 bn. This positions Jio as a key beneficiary of the digital boom.

However, the company has faced challenges, with TRAI reporting a subscriber loss of 16.5 m over four months following the tariff hike in June 2024.

While Jio's IPO has created immense buzz, it remains to be seen whether it will outshine the market and live up to expectations.

Investors should conduct thorough due diligence into the company's financials and corporate governance practices to ensure any investment aligns with their financial goals and risk tolerance.

For more information on IPOs, check out the?list of upcoming IPOs.

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