Jio Platforms shares jump 21.5% on debut, valuing firm at $131 billion

Jio Platforms shares climbed 21.5% on Wednesday, marking the strongest debut for a stock in the Indian market. The gain placed the company's market capitalization at 12.5 trillion rupees, or approximately $131 billion, according to data from the National Stock Exchange. This valuation makes Jio the second most valuable company in India, trailing only its parent, Reliance Industries.

The listing follows an initial public offering that raised 302 billion rupees ($3.2 billion), the largest ever in India. Jio sold 270 million shares at a price of 1,119 rupees each. Akash Ambani, the company's managing director, stated that the offer was fully subscribed within 95 minutes of opening on Oct. 21. The subscription ratio exceeded 22 times, with institutional investors driving the bulk of the demand.

Data from the Bombay Stock Exchange shows the qualified institutional portion was subscribed 70.55 times. Retail investors subscribed 2.72 times. Global funds including BlackRock, Capital Group, and GIC participated in the anchor book, which is reserved for large institutional investors. Including these anchor investors, the offering attracted $78 billion in demand.

Deven Choksey, founder of DRChoksey FinServ, told CNBC that inclusion in benchmark indices will likely support the share price. He noted that some investors who purchased shares in 2021 may seek to exit within six months. By that time, the stock is expected to be added to the MSCI index and the Nifty 50. This inclusion should generate steady demand and buffer the price against potential selling pressure from early holders.

Nomura, a global brokerage, issued a buy rating on Wednesday. The firm set a target price of 1,340 rupees, which represents a 19.7% upside from the IPO price. Nomura's report argued that Jio's capital expenditure cycle is nearing completion. This shift is expected to lead to a sharp increase in the company's free cash flow. Shares closed the day trading at 1,360 rupees.

Reliance Industries retains a controlling stake of more than 66% in Jio Platforms. Meta Platforms' affiliate, Jaadhu Holdings, holds nearly 10% of the company. Google International owns 7.7%, according to LSEG data. These major shareholders provide a stable base of ownership as Jio transitions from a private holding to a public entity.