Jio Platforms IPO debut lifts shares more than 21 percent

The Jio Platforms IPO made a strong debut on Wednesday, as shares rose more than 21 percent on their first day of trading in Mumbai.

The listing followed the largest public offering in India‘s history. Jio runs India’s biggest telecom and digital services business. Investors lapped up the issue, and both retail and institutional buyers took part.

How the Jio Platforms IPO debuted

Shares opened at 1,358 rupees on the National Stock Exchange and the BSE. That was a 21.36 percent premium to the issue price of 1,119 rupees, which gave successful applicants a gain of 239 rupees per share before taxes.

By mid-morning, the stock traded near 1,357 rupees. Later it settled about 4.5 percent above the opening level.

The opening valuation of about 12.5 trillion rupees, or $131 billion, made Jio the second most valuable company in India. Only its parent, Reliance Industries, ranks higher. Jio also passed Bharti Airtel on the opening quote.

Record size and strong demand

Jio sold 270 million shares at 1,119 rupees each. The sale raised 302 billion rupees, or $3.2 billion, and it set a record for an Indian public offering.

Demand was heavy. Bids covered the issue more than 22 times, according to BSE data. Large institutions led the way, bidding 70.55 times their portion, while retail investors bid 2.72 times theirs.

Akash Ambani, who runs Jio as managing director, said buyers filled the whole issue within 95 minutes of opening on October 21. With anchor investors counted, demand reached $78 billion.

The final issue price sat at the top of that band. Global funds such as BlackRock, Capital Group and GIC joined the anchor portion. Bidding stayed open from October 21 to October 23, with a price band of 1,065 to 1,119 rupees.

Who owns Jio after the Jio Platforms IPO

Reliance Industries held more than 66 percent of Jio Platforms. A Meta Platforms affiliate, Jaadhu Holdings, held nearly 10 percent, and Google International held 7.7 percent.

Buying the shares gives investors a separate way to hold the business. Reliance shares, by contrast, cover its other businesses along with its leftover Jio stake.

What analysts expect

Nomura rated the stock a buy and set a target of 1,340 rupees. That implies a gain of 19.7 percent over the issue price. The broker said Jio’s spending cycle was largely over, and it expected a sharp improvement in free cash flow.

Deven Choksey of DRChoksey FinServ said that eventual inclusion in key benchmark indices should create enough demand to protect the share price. He added that early backers from around 2021 may want to sell in roughly six months.

He said Jio would likely join both the Nifty 50 and the MSCI index by then, which should keep supply in check. The Jio Platforms IPO therefore shows how index demand can support a new listing.

Now the question is whether earnings growth and cash flow can justify such a high valuation. For now, the Jio Platforms IPO has set a new benchmark for listings in India.