According to CLSA, Reliance Jio’s planned initial public offering (IPO) will be a stock rerating catalyst for Bharti Airtel. The brokerage firm said that Jio and Airtel are two of the most direct ways to invest in India’s digitalisation.
In its latest note, CLSA noted that while Jio is currently unlisted, investors can gain exposure through its parent company, Reliance Industries Limited. It added that Jio’s leadership and big vision for digital services warrant a valuation premium. CLSA values Jio in its sum-of-the-parts (SOTP) valuation at a $111 billion enterprise value, 60 per cent higher than the 33 per cent equity sale that raised $20 billion in 2020. The firm said that Kio’s planned IPO will also be a valuation catalyst for Airtel.
CLSA noted that while Jio has more subscribers at 460 million, Airtel has the highest average revenue per user (ARPU) at Rs 203. It added that although Jio’s 4G roll-out hit smaller operators, unable to transition to 4G, Airtel ramped up its own 4G services and offered a premium product, enabling this incumbent’s market share to hit new highs.
In a bluesky scenario, CLSA expects the duo’s revenue could rise 50 per cent to $47 billion by FY26, in case they achieve 90 per cent combined market share and reaches an ARPU of Rs 300. In addition, as per CLSA, a boost from 5G fixed wireless access (FWA) and industrial internet could further accelerate growth.
