The brokerage firm Emkay has reiterated its bullish view on Reliance Industries (RIL), giving the stock a “Buy” rating with a target price of Rs 1,600. Now at this, what is stirring more market curiosity is not just the upside potential, it is the Mukesh Ambani led Jio’s potential IPO.
According to media reports, RIL is planning to list around 5% stake in its telecom arm, Reliance Jio Infocomm (RJio), which could raise up to $6 billion (around Rs 52,200 crore) and value Jio at a whopping $120 billion. If it materialises, this will be India’s biggest-ever public issue. While there has been no formal confirmation from the company, the brokerage believes that the valuation is a likely indicator that will evolve over time based on investor interest and industry benchmarks.
Jio IPO: Small float, Big impact?
A report by Bloomberg indicated that RIL is currently in talks with SEBI to seek approval for a smaller-than-usual public float. Typically, listed companies are required to offer at least 25% of their equity to the public. But in the case of RIL, it is said to be pushing for a lower float of 5%, citing limited market depth to absorb a larger issue at such a high valuation.
The brokerage in its report noted, “even a float of 5% at the current valuation would place it among India’s largest,” highlighting the sheer scale of the potential offering. However, such a low float could also limit the ability of early investors to exit, raising questions about liquidity and broader investor participation.
Valuation math: How does Jio stack up?
Based on Emkay’s estimates, RJio at $120 billion equity valuation translates to an Enterprise Value (EV) of $136 billion, which is slightly above their internal estimate of $121 billion. This valuation implies 16.4x EV/EBITDA for FY26 and 13.7x for FY27.
For comparison, Bharti Airtel, one of Jio’s closest rivals trades at 12x FY26E and 10.4x FY27E EV/EBITDA, added Emkay report.
However, Emkay pointed out that “Bharti Airtel’s business includes stakes in Indus Towers and Airtel Africa, which carry lower multiples,” and adjusting for these, the implied valuation for Bharti’s India business is 15.4x FY26E, putting Jio’s projected numbers in perspective.
What else is driving Reliance’s outlook?
While the Jio IPO headlines are stealing the spotlight, the brokerage firm also sees steady progress in other segments of Reliance’s vast empire:
- O2C (Oil-to-Chemicals) remains stable
- The New Energy segment is progressing with gigafactories and renewable projects expected to go live over the next 4-6 quarters.
- Retail growth is expected to accelerate, while subscriber additions and ARPU in Jio continue to improve.
Valuation, risks, and what to watch
Emkay continues to value RIL using a Sum-of-the-Parts (SOTP) approach, with segment-wise valuation models. The brokerage has raised target multiples for ‘Other Segments’ and ‘New Energy’ verticals, reflecting optimism about future cash flows.
However, it cautions investors about risks including “adverse commodity/currency movements, rising B2C competition, delay in monetization of new ventures, and policy-related challenges.”