TELECOM: JPL IPO valuation could drive re-rating for Bharti and RIL
MUMBAI, 7 OCTOBER: As per Bloomberg, Jio Platforms (JPL) is seeking a valuation of INR11t (USD114b) in its impending IPO. We note that the valuation ask is broadly in line with our current ascribed valuation of INR11.2t for JPL and implies ~12x FY28E EV/EBITDA, representing a ~17% premium to the implied ~10.3x FY28E EV/EBITDA multiple for Bharti’s India business (excluding its stake in Indus, Airtel Africa and Hexacom’s minority interest).
After JPL’s listing, there is a case for applying the holdco discount on RIL’s ~66.4% stake; however, we believe the stock is already factoring in ~18-36% holdco discount, based on 15-20x Sep’28E EV/EBITDA valuation for Retail (vs. our ascribed ~28x EV/EBITDA).
The delay in implementing a tariff hike (vs. initial expectation of Dec’25) has been a key reason for the muted stock performance of Bharti (-15% YTD) and RIL (-23%) vs. Nifty-50 (-13%), in our view. However, after the JPL IPO and Vi’s impending fundraise, we believe the case for a tariff hike is stronger and build in a smartphone tariff hike of ~15% in Dec’26. We reiterate our BUY ratings on Bharti and RIL as we believe the risk-reward is compelling.
JPL IPO at INR11t can potentially act as re-rating catalyst for Bharti
As per Bloomberg, JPL is seeking an equity valuation of INR11t (USD114b) in its impending IPO, broadly in line with our ascribed valuation of INR11.2t. The valuation ask implies ~12x FY28E EV/EBITDA, which represents a ~17% premium to the current implied multiple for Bharti’s India business (excl. Indus, Africa and Hexacom minority). Since RJio is the market leader in both wireless and home broadband, it has a greater sway on industry’s pricing architecture and will have lower float at listing (~3%). However, we do not believe there is a case for any significant discount for Bharti (vs. JPL), given its superior FCF generation and higher RoCE. We currently ascribe a broadly similar valuation (~12x FY28E EV/EBITDA) to JPL and Bharti’s India business. Further, Bharti’s stake in Indus Tower (~51%) and Airtel Africa (~80%) is valued at ~INR1.25t, based on a 25% holdco discount to their respective CMPs. Additionally, Bharti also offers an exposure to data center (through ~60% stake in Nxtra) and financial services (through Airtel Money both in India and Africa), which makes the case for a parity on multiple stronger.
JPL IPO provides headroom for potential value unlocking in RIL
For RIL, after the JPL IPO, there would be a case for a holdco discount on its JPL stake. However, we believe that at CMP, the stock price is already factoring in ~18-36% holdco discount for RIL’s ~66.4% stake in JPL (based on 15x/20x Sep’28E EV/EBITDA multiple to RRVL, respectively). While investors who invested in RIL for its digital services will now have an option to gain direct exposure through JPL, RIL will remain a play on India’s largest retailer, India’s largest integrated energy company, and several other growth optionality (such as New Energy, data center, AI, and FMCG). Earnings upgrade on the back of stronger refining/petchem cycle, recovery in retail revenue growth and profitability remains the key medium-term trigger for the stock.
Case for a tariff hike strengthens after JPL IPO
The delay in implementing a tariff hike (vs. initial expectations of Dec’25) has been a key reason for the muted stock performance of Bharti (-15% YTD) and RIL (-23%) vs. Nifty-50 (-13%), in our view. Given the delays in tariff hikes, Bharti has recently discontinued its entry-level INR299 daily unlimited data pack to support organic ARPU growth. RJio has relaunched its JioPrime membership to boost revenue while signaling that a tariff hike could be imminent. After the JPL IPO and Vi’s impending fundraise, we believe the case for a tariff hike is stronger and build in a smartphone tariff hike of ~15% in Dec’26, which should provide visibility on delivering ~15% EBITDA CAGR over FY26-29E.
Impact of JPL’s listing on Bharti, and how to position going into the IPO
The key debate going into the JPL IPO is its potential impact on Bharti, as there could be a shift in telecom sector allocations with another large listed investible option. However, we believe concerns around a partial shift in the telecom allocation weight from Bharti to JPL are overblown, given JPL’s limited initial free float (vs. Bharti’s FII/DII ownership). Further, with expectations of a tariff hike soon after JPL’s IPO, we expect strong earnings delivery, which could also lead to potential multiple re-rating for both Bharti and JPL.
View: Constructive on Bharti, BHL, and RIL
We continue to prefer Bharti (improved FCF, deleveraging, continued premiumization), BHL (pure-play exposure to high-growth wireless and HBB businesses, lower capital allocation risks vs. Bharti), and RIL (closer to bear case valuations, likely higher O2C earnings in the near term). We reiterate a Neutral stance on Indus, Tata Communications, and Vi.
(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)
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