Okay, so the Jio IPO closes this afternoon, and my feed has been nothing but Jio for a week. Everyone's quoting the same three numbers.
So I did the boring thing. I actually went through the prospectus. Here's what I found, run through the same three questions I ask about every IPO: Is the business good? Is the balance sheet clean? Is the price fair?
First, the basics
It's a ₹30,213 crore issue, all fresh shares, priced at ₹1,065–₹1,119. Nobody's selling, and the money mostly goes toward paying off debt. Honestly, that's how you'd want an IPO to look.
Demand is huge too. By last night it was 5.37x subscribed. Institutions bid 12.87x, while retail was only 1.5x. The big players clearly want in.
Is the business good? Yes.
It's India's biggest network, and its customers leave less often than Airtel's or Vi's. Hard to argue with that.
The catch surprised me. Jio doesn't own the Jio brand. Reliance does. And Reliance Retail sells the plans that bring in 77% of Jio's revenue. So you're buying a company that leans heavily on its parent.
Is the balance sheet clean? Kind of.
You'll see "net debt is just ₹9,500 crore" everywhere. True, but there's an asterisk. That number leaves out about ₹1.05 lakh crore Jio still owes the government for spectrum.
And here's the part that really got me. Over three years, building and running the network ate almost all the cash. Only about 6% of profit was actually left over.
Is the price fair? Yes, but it's not cheap.
Jio is priced around 33x earnings, while Airtel sits around 40.7x. Sounds like a discount, right? But Airtel earns roughly double Jio's return on equity, and Jio's profit growth has slowed from about 22% to 9%. So it's cheaper for a reason.
The thing I couldn't figure out
The prospectus doesn't say what's in the Reliance Retail contract. That's the deal behind three-quarters of Jio's revenue, and we can't see the terms. I won't pretend I know how risky that is.
So, what do I think?
This is just my opinion, not a tip.
Jio is a great company at a fair price. It's not a steal.
Listing day could be good. The grey market is showing around a 21% premium. But grey market numbers are basically gossip, and gossip changes overnight.
Long term, I see this as a slow, steady stock, not a doubling-your-money one. I'd get more excited if Jio starts closing the ₹48 gap in monthly revenue per user with Airtel. I'd get worried if spending shoots back up.
I'll check back after listing, and again in 6 and 12 months, and tell you honestly what I got right and what I got wrong.
Applying today? Check your broker's cutoff. Many close earlier than you'd think.
Not investment advice, just me sharing how I think about it.
If this saved you from reading 591 pages, subscribe. I'll do the boring part for every big IPO.