Jio Platforms IPO likely by October-November; AI and ARPU growth in focus: Piyush Pandey

Reliance Industries' much-awaited initial public offering (IPO) of Jio Platforms is expected to hit the market around October-November, according to Piyush Pandey from Centrum, who believes the listing process is now moving ahead after the draft red herring prospectus (DRHP) received board approval.

Speaking to ET Now, Pandey said the IPO timeline appears to be on track, with the company requiring another three to four months before the public issue is launched.

"We expect it will take around three to four months, maybe October-November, when the IPO actually happens."


Strong Investor Appetite Could Support the Issue
While market conditions will remain an important factor before the company proceeds with the IPO, Pandey believes investor demand is unlikely to be a hurdle.

He pointed out that the fresh equity issuance is relatively small, which should make the fundraising exercise easier despite broader market volatility.

"I would say the interest remains very strong, and with just a 2.9% fresh equity issue, it should not be difficult to put it through. So, probably October-November is the time when we expect this IPO to happen."

Holding Company Discount May Emerge Post Listing
One of the key concerns surrounding the listing is the potential increase in Reliance Industries' holding company discount after Jio Platforms becomes a separately listed entity.

Pandey expects the discount to settle in the 20-25% range but believes Reliance's emerging new energy business could eventually offset part of that valuation impact if it scales successfully.

"After the listing of Jio Platforms, we expect the holding company discount to be around 20 to 25%. But I would say the other thesis, or other stories, remain around new energy. If they are able to monetise it, or if that comes online, that is something which can drive value. But for Jio Platforms, the discount would be around 20 to 25%."

ARPU Growth Remains Central to the Investment Story
Average Revenue Per User (ARPU) continues to be one of the biggest metrics investors will monitor ahead of the IPO.

Pandey expects tariff hikes, increasing 5G adoption and migration to higher-data plans to support healthy ARPU growth over the coming years.

"The current last quarter ARPU was Rs 214 per month, and we are building in another tariff hike of around 10 to 12% over the next three to six months. Apart from tariff hikes, organic improvement also takes place because customers are moving to 5G packs, and customers are moving from 1 GB per day packs to 2 GB per day packs. So, organic improvement of around 4 to 5% per annum. Apart from that, the tariff hike impact can be close to 5 to 6% per annum. Broadly, we can expect Jio ARPU to grow at around 10% per annum over the next four to five years."

AI Could Become the Next Value Creator
Beyond telecom services, Reliance is increasingly positioning Jio Platforms as a technology company with artificial intelligence expected to play a larger role in its future growth strategy.

Pandey believes AI-powered consumer applications built on Jio's vast subscriber base could become the company's next major value driver after subscriber additions and ARPU expansion.

"AI-based businesses are something which can be incubated on top of this customer base. Consumer-facing apps, if developed and if they find traction among the customer base, are something which can drive value. So, obviously, I would say the first leg of the value driver was customer addition. In the next phase, it will be ARPU improvement along with getting into AI-based apps, which can help provide more value to the customer base."

Jio Financial and Jio Platforms Serve Different Opportunities
Addressing concerns that a Jio Platforms IPO could dilute investor interest in Jio Financial Services, Pandey said the two businesses operate in distinct segments and are unlikely to compete for the same growth opportunities.

While Jio Financial remains focused on financial services, he sees Jio Platforms expanding into digital services across sectors such as education, healthcare and agriculture.

"No, I do not think so because Jio Financial is mostly restricted to BFSI. For Jio Platforms, if they are able to develop apps that cater to education, healthcare, maybe agriculture, those types of value-added services can be provided to the customer base, and that is something which, of course, Reliance is also thinking about. So, these remain the next-level triggers. It depends on when they will come online."