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RJio FY26 ARA: Setting the stage for value unlocking

We analyzed Jio Platforms (JPL) and Reliance Jio’s FY26 annual reports to get insights on the performance and other key developments. Below are the key takeaways:

Equal contribution from subscriber net adds and ARPU drives ~13% YoY revenue growth

 * RJio’s standalone revenue rose ~13% YoY to INR1.29t in FY26, driven by ~36m overall net subscriber additions (the EoP base up ~7% YoY) and ~8% YoY growth in blended ARPU.

* Out of ~36m net adds, Home Broadband (HBB) contributed ~10m net adds driven by the scale-up of JioAirFiber, while M2M SIMs accounted for ~11m net adds. The consumer wireless subscriber base grew ~15.5m, driving ~77bp YoY increase in RJio’s wireless subscriber market share to 41.4%.

* RJio’s blended ARPU rose ~8% YoY to INR212, driven by partial flow-through of the Jul’24 tariff hike, improving subscriber mix and rising traction in HBB services.

* We estimate RJio’s consumer wireless ARPU and revenue to have grown ~9-10% YoY in FY26, leading to ~65bp YoY gain in its revenue market share to 42.3%.

* However, with tariff hikes already in the base, blended ARPU growth moderated to ~4% YoY in 4QFY26 due to headwinds to data monetization from unlimited offerings. The tariff hike remains key to the sustenance of double-digit revenue and EBITDA growth for FY27.

* Revenue received in advance from Reliance Retail (RRL) accounted for ~87% of RJio’s net revenue (vs. ~90% in FY25), suggesting a likely increase in contribution from the postpaid segments such as HBB.

Pre-IND AS margin contracts ~30bp YoY as lease costs and professional fees surge

* RJio’s reported network opex inched up ~3% YoY as rental expenses dipped ~17% YoY. However, lease repayments surged ~70% YoY. When adjusted for lease repayments, network opex likely grew ~10% YoY in FY26.

* Sales and distribution (S&D) expenses rose ~24% YoY, driven by high competitive intensity for subscriber acquisition. Based on RJio’s payouts related to S&D expenses to RRL, we estimate the cost per gross subscriber addition has slightly moderated to INR293 from INR334 in FY25.

* Other expenses grew ~36% YoY in FY26, primarily due to the 68% YoY jump in professional fees. Further, we note that RJio’s professional fees paid to related parties (INR54b) continued to remain higher than the fees booked in P&L (INR25b).

* Reported standalone EBITDA grew ~16% YoY to INR698b, with reported EBITDA margin expanding ~135bp YoY to 54.2% and ~65% incremental margins.

* However, adjusted for the lease payments, pre-IND AS EBITDA grew ~12% YoY to INR625b, with margins contracting ~30bp YoY to 48.5% and incremental margin moderating to ~46% (vs. ~57% in FY25).

Valuation and view

* We expect RJio to remain the biggest growth driver for RIL (digital services likely to contribute ~80% of RIL’s incremental EBITDA over FY26-28), with an 18% reported EBITDA CAGR over FY26-28. This growth will be driven by wireless tariff hikes (built in ~15% in 2QFY27), market share gains, and continued ramp-up of its homes and enterprise offerings.

* We value RJio on a DCF implied ~11.5x Mar’28E EV/EBITDA to arrive at our enterprise valuation of INR11.3t (USD120b) for RJio (Wireless + Home broadband). We assign ~INR740b (USD8b) valuation to other non-mobility offerings under JPL to arrive at INR12t (or ~USD128b) enterprise valuation.

* Factoring in net debt, our equity valuation for JPL stands at INR10.7t (~USD114b). The attributable equity value for RIL, after adjusting for ~33.5% minority stake, comes to INR525/share.

* We reiterate our BUY rating on RIL with an unchanged TP of INR1,655. Value unlocking through the impending JPL IPO, ramp-up of quick-commerce offerings under RRL, higher spreads in the O2C business, and optionality from faster ramp-up of FMCG, AI, Datacenter, and New Energy remain key triggers for the stock.

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