Reliance Jio gained robust 9.9 million subscribers following the completion of SIM consolidation (trailing 12 months 8.4 million) post-tariff hike. However, persistent high capex, healthy margin expansion but steep rise in interest costs remain a concern.
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Dolat Capital Report
Reliance Jio Infocomm Ltd.'s Q1 FY26 results were in-line. revenue /Ebitda/adjusted profit after tax grew +16.6/19.9/23.3% YoY & 2.9/5.3/1.1% QoQ driven by tariff hike in early July 2024.
The company gained robust 9.9mn subscribers following the completion of SIM consolidation (trailing 12 months 8.4 million) post-tariff hike. However, persistent high capex, healthy margin expansion but steep rise in interest costs remain a concern.
Jio's strong position in 4G/5G combined with Vodafone Idea's payout obligations, implies consistent tariff hikes for the industry and/or duopoly, benefiting both Jio and Bharti Airtel Ltd. We have broadly maintained our estimate for FY26-27.
Key triggers for the future are-
tariff hikes,
higher monetization of 5G subs,
lower capex/robust free cash flow and
a potential public listing.
Our Enterprise/Equity value for Jio (per share of RIL for its effective ~65% stake in Jio) is unchanged at Rs 482/449 @ 11x FY27E EV/E.
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