The proposed listing of Jio Platforms could prove to be a major catalyst for a re-rating of Reliance Industries (RIL), by giving the conglomerate’s largest growth asset an independent market valuation and bringing greater transparency to its sum-of-the-parts (SOTP) structure, according to a research report by Religare Broking.
The brokerage has assigned a BUY rating to RIL, with a target price of Rs 1,696, implying an upside of 46.7% from the stock’s closing price of Rs 1,156 on October 12. Currently, the stock trades at Rs 1,175.
At the heart of Religare’s investment thesis is the potential for Jio’s listing to narrow the holding-company discount at which conglomerates typically trade. The lack of transparency in valuing individual businesses and ambiguity around internal capital allocation often weigh on conglomerate valuations. An independent, publicly quoted price for Jio would make RIL’s largest growth asset easier to value and provide greater clarity on the group’s SOTP valuation.
This, the brokerage argues, could set off a chain of events: independent price discovery for Jio, greater transparency in RIL’s SOTP valuation, compression of the conglomerate discount and, eventually, a re-rating of the parent company.
Religare believes investors should accumulate RIL shares ahead of the proposed listing rather than wait for Jio’s market debut. Institutional equity markets tend to price in major corporate catalysts before their formal execution, and waiting until the listing could mean missing the initial phase of multiple expansion. Investing in RIL at current levels would allow investors to participate in Jio’s value discovery while retaining exposure to the group’s other businesses — Reliance Retail, oil-to-chemicals (O2C) and new energy.