Global brokerage firm Jefferies has maintained its ‘Buy’ rating on Reliance Industries, setting a target price of Rs 3,580 per share. This target implies a potential upside of 13% from the stock’s closing levels on Wednesday, making it the third highest price target for Reliance Industries on the street.
Potential Jio Listing by 2025
Jefferies foresees the potential listing of Reliance Jio by Calendar Year 2025 at a valuation of $112 billion, suggesting a 7-15% upside for Reliance Industries. Recent tariff adjustments by Jio indicate a strategic focus on monetization and gaining market share in subscribers.
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IPO Considerations and Spin-off Strategy
The initial public offering (IPO) of Reliance Jio may involve only minority shareholders selling their stakes. The Mukesh Ambani-owned conglomerate could consider spinning off Jio and listing it post a price discovery process.
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Jefferies notes that the stock performance and less-than-majority holding in Jio Financial Services indicate a spin-off route for Reliance Jio, with both domestic and foreign investors showing preference for this strategy.
Holding Company’s Discount Concerns
Investors’ primary concern remains the holding company (Holdco) discount, typically ranging from 20-50% in India and even higher for conglomerates in Korea and Taiwan. Additionally, there is apprehension about large retail investor participation in an IPO scenario.
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More Clarity in RIL’s Upcoming AGM?
Analysts expect clarity on Jio’s initial share sale at parent RIL’s annual general meeting, likely next month. Jefferies had earlier mentioned its intent to monitor developments on Jio’s listing at the upcoming RIL AGM, adding: “Rising focus on monetization could be a precursor to its imminent listing.”
Reliance Industries share performance in last one year
In terms of stock performance, Reliance Industries shares have demonstrated positive returns across multiple time frames. Over the past month, the stock has given a commendable 8.41% return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 16.10%, indicating a strong upward trend.
Year-to-date, TVS Motor shares have surged by 21.94%, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 14.26% in the last twelve months, emphasizing its sustained growth and attractiveness to investors.
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