Jio Platforms: $131 Billion Valuation Follows Record Indian IPO

Jio Platforms ended its first day of trading on Wednesday with a market capitalization of 12.5 trillion rupees, or $131 billion. This valuation places the telecom and digital services firm second in India behind its parent, Reliance Industries, according to National Stock Exchange of India data. The share price climbed 21.5% above the initial public offering price.

The company sold 270 million shares at 1,119 rupees each to raise 302 billion rupees, equivalent to $3.2 billion. This marks the largest capital raise in Indian market history. Demand for the shares far exceeded the supply, with the public issue subscribing more than 22 times over. Institutional investors drove the bulk of that demand, subscribing to the qualified institutional portion 70.55 times, while retail investors subscribed 2.72 times.

Akash Ambani, managing director of Jio Platforms and son of billionaire Mukesh Ambani, stated that the offering was fully subscribed within 95 minutes of opening on October 21. The anchor investor round included participation from global funds such as BlackRock, Capital Group, and GIC. Total demand from all investors reached $78 billion.

Ownership of Jio Platforms remains concentrated among a few major holders. Reliance Industries retains a stake of more than 66%. Meta Platforms holds nearly 10% through its affiliate Jaadhu Holdings, and Google International owns 7.7%, according to LSEG data. The current share price of 1,360 rupees reflects the market's initial response to the listing.

Nomura issued a buy rating for the stock on Wednesday, setting a target price of 1,340 rupees. The brokerage noted that the company's capital expenditure cycle is largely complete and expects a sharp improvement in free cash flow. This target implies a 19.7% upside from the IPO price, though shares were last trading above that level at 1,360 rupees.

Deven Choksey, founder and managing director of DRChoksey FinServ, told CNBC that inclusion in key benchmark indices will likely support the share price. He expects Jio Platforms to be added to the MSCI index and the Nifty 50 within six months. Choksey suggested that index inclusion will generate steady demand and protect the stock from potential oversupply by early investors who may seek to exit their positions.

The stock's performance on its debut sets the stage for its potential inclusion in major market benchmarks. The company's rise to the second most valuable firm in India is a direct result of the strong demand recorded during the subscription period. The share price movement on Wednesday confirms the market's valuation of the firm at $131 billion.