Reliance Industries Share Price Gain 2% After Jio Base Tariff Rises

Jio's average revenue per user or ARPU — a key industry metric to gauge the income generated from each user — will rise 20% from Rs 211 to Rs 253.

Sim card packets of Reliance Jio. (Source: Usha Kunji/NDTV Profit)

Shares of Reliance Industries Ltd. rose over 2% during early trade on Tuesday after Jio discontinued its entry-level recharge plan, leading to a rise in the base rate that will lead to higher average revenue.

Jio has discontinued its entry-level 1GB per day recharge plans of Rs 209 (22 days) and Rs 249 (28 days). Subscribers will now have no choice but to move up to the next plan of Rs 299, which offers 1.5GB per day for 28 days.

A company executive told NDTV Profit that the two discontinued plans are now only available at physical points of sale, and online recharges cannot be done for the same.

Subsequently, Jio's average revenue per user or ARPU — a key industry metric to gauge the income generated from each user — will rise 20% from Rs 211 to Rs 253. Assuming 20% of Jio’s recharges were made under these plans, this leads to an ARPU uplift of Rs 8.4 or 4% of Q1 ARPU of Rs 208.8.

Besides, Airtel and Vodafone Idea base monthly plans start at Rs 299, but provide only 1GB data per day. Therefore, Jio users switching to rivals is unlikely.

Jio IPO

Analysts at Citi Research said market regulator SEBI's recent proposal to modify minimum public offer requirements for large IPOs can have meaningful positive implications for Jio’s potential market debut.

For issuers with a post-IPO market cap of Rs 5 lakh crore, the minimum public offer size will be reduced from 5% to 2.5% of post-issue capital, as per the proposal.

"We value Jio Platforms at an enterprise value of $135 billion and equity value of $120 billion. A 5% public offer would amount to $6 billion of share supply, which is fairly large for the Indian market to absorb, especially as 35% is reserved for retail investors (SEBI has decided to retain this). A 2.5% public offer for Jio would amount to $3 billion of share supply, which we believe not only reduces the supply overhang at the time of the IPO but could also limit holding company discount concerns for RIL," Citi said.

Also Read: Reliance Jio IPO: RIL Reportedly Plans $6 Billion Offering With 5% Float

RIL Share Price Up

Reliance Industries' share price advanced 2.3% intraday to Rs 1,413 apiece.

Reliance Industries' share price advanced 2.3% intraday to Rs 1,413 apiece.

Reliance Industries' share price advanced 2.3% intraday to Rs 1,413 apiece. The stock was the top point contributor on the benchmark Nifty 50, which was up 0.12%

The stock has risen 16% in the last 12 months and fallen 5% on a year-to-date basis. The total traded volume so far in the day stood at 2.4 times its 30-day average. The relative strength index was at 49.

Out of the 36 analysts tracking RIL, 33 have a 'buy' rating on the stock, one recommend a 'hold' and two suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price target of Rs 1,629 implies a potential upside of 15%.

Also Read: Stock Market LIVE: Nifty, Sensex Trade Higher As RIL, Tata Motors, And Kotak Bank Rise

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WRITTEN BY
Shubhayan Bhattacharya
Shubhayan covers markets and business news at NDTV Profit. He has a keen in... more
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