Citi has reiterated its buy rating on Reliance Industries (RIL) with a target price of ₹1,690 after the Securities and Exchange Board of India (SEBI) finalised changes to IPO norms for large companies. The regulator has reduced the minimum public offer size for IPOs of firms with market capitalisation above $57 billion — a category Jio Platforms would comfortably qualify for — from 5% to 2.5%. Timelines for meeting minimum public shareholding requirements have also been materially relaxed.
Citi said the regulatory change is a major positive for RIL, reinforcing its earlier view that concerns over holdco discount following Jio’s listing are unwarranted. It noted that a 5% public offer would have meant $6 billion-plus of share supply, a scale that the Indian market might have struggled to absorb. In contrast, a 2.5% offer translates to just over $3 billion of supply, which Citi said is much more manageable for the market.
The brokerage added that the reduced float should remove a key liquidity overhang for Jio’s potential IPO and largely dispel worries about a valuation discount for RIL once the telecom arm is listed. It said the move enhances visibility for value unlocking at Jio while strengthening the investment case for RIL.
Disclaimer: The views and recommendations made in this article are those of Citi. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
