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According to media reports, Reliance Industries (RIL) is proposing to sell 5% of its Reliance Jio Infocomm (RJio) unit in a potential listing that may raise ~USD6bn, implying a valuation of ~USD120bn for RJio. Such a valuation implies an EV of USD136bn versus our current estimate of ~USD121bn, denoting a Rs64/sh or 4% upside to our SOTP based TP of Rs1,600 for RIL, excluding any holdco discount at this stage. While the company has not given any formal update on this, we believe this is an indicative valuation and is likely to evolve, basis investor feedback and peer valuations. RIL’s O2C outlook is steady with the global refining market likely to be favorable for GRMs, while ‘new energy’ is also making progress, with gigafactories and RE generation expected in 4-6 quarters. Further, the company is confident about retail growth accelerating ahead; Jio is overall steady, with healthy subscriber additions and ARPU improvement. The upcoming AGM could provide further business updates and milestones. We reiterate BUY on the stock.

Discussion with SEBI regarding the float for RJio

A Bloomberg report has indicated that RIL is in discussions with the Securities and Exchange Board of India (SEBI) to seek approval for bringing RJio to market with a public float lower than the customary 25%, in a proposed listing that is planned for CY26. RIL has been conveying to the regulators that the market does not have the depth to absorb a bigger listing, and that even a float of 5% at the current valuation would place it among India’s largest. A float of 5% would limit the ability of early investors to exit.

RJio’s ~USD120bn equity valuation is slightly above our expectation

We are currently valuing RJio at USD121bn EV, which is ~10% lower than the proposed valuation per the said article. However, we believe that this is an indicative valuation and is likely to evolve, basis investor feedback and peer valuation. At USD120bn equity (or USD136bn EV) valuation, RJio will be trading at 16.4x FY26E and 13.7x FY27E EV/EBITDA, per our estimates. Currently, Bharti Airtel is trading at 12.0x FY26E and 10.4x FY27E EV/EBITDA; however, Bharti Airtel’s business includes stake in Indus Towers and Airtel Africa which carries a lower multiple. Adjusting the stake in these businesses, the implied multiple for Bharti Airtel’s India business would be 15.4x FY26E and 13.2x FY27E EV/EBITDA.

Valuation

We value RIL on SOTP basis, with core segments based on Mar-27E EV/EBITDA and Upstream/New Energy/Other segments on DCF+premium/EV-IC/EV-EBITDA methodologies. We raise target multiples for Other Segments and New Energy to 15x EV/EBITDA and 2x EV/IC, respectively. Key risks: Adverse commodity/currency, B2C competition, delay in monetization of ventures, and policy and new business risks.

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