A potential public listing of Reliance Jio looks possible in calendar 2025 at a valuation of $112 billion, with the company having recently hiked tariffs showing commitment to monetising, said Jefferies in a note on the company. A spin-off with a listing could unlock more value compared to an IPO, it added.

The subscriber market share gains and tariff hikes, “create a case for a possible public listing in CY25 in our view,” said the US investment bank. It added that RJio could look to an IPO or a spin-off as it did in the case of Jio Financial Services.

After Jio Financial Services the market is eagerly anticipating the listing of the other two major businesses of Reliance Industries - digital and retail. Recent indications have been that RJio could be the next in line. In May, businessline had reported that the internal thinking within the group is an early listing for the telecom business with a valuation in the region of $100 billion.

IPO or spinoff

According to Jefferies, the decision to spin off or do an IPO hinges on balancing the upside potential of full value unlocking in the spin-off with the lower controlling stake. It pointed out that institutional investors would prefer a spin-off to avoid the holding company discount to listed subsidiaries when listing an IPO.

Elaborating on this the research note said with a 33.7 per cent minority stake in Jio, RIL could fulfil the IPO requirement with a 10 per cent listing of Jio. Since a major portion of capex requirements are expected to be met through internal accruals, it is most likely that a large part of the IPO or probably the entire IPO could be an offer for sale. “While RIL would retain majority control after the listing, our analysis suggests the Indian stock market imputes a holdco discount of 20-50 per cent to a listed subsidiary in arriving at a holdco’s fair value,” said Jefferies.

In the case of an IPO there would be better control for the holding company, but “ The large retail investor mobilization in the case of an IPO is another concern.”

The other option for RJio is to adopt the Jio Financial playbook and do a vertical spinoff and list it through a price discovery. This route would have the benefit of avoiding the holdco discount while there could be better value unlocking for RIL’s shareholders. The lower controlling stake in Jio could be addressed by buying a part of the shares offered by private equity funds after the spinoff, the research note said.

With a spin-off, RIL could be valued at ₹3,580 a share, while in the case of an IPO the fair value would be lower at ₹3,365., it said.