RIL shares hit fresh high on Reliance Jio tariff hike; stock price targets, potential IPO & more 

Shares of Reliance Industries Ltd on Friday climbed for the fourth straight day and hit their fresh high following Reliance Jio's announcement on 17-25 per cent tariff hikes. The hikes were largely in line with Street estimates, but the stock has seen revision in target prices by a couple of brokerages. The most-valued stock on Dalal Street has added Rs 1,33,000 crore to its market capitalisation (m-cap) in four straight days of gains.

On Friday, the stock rose 2.21 per cent to hit a record high of Rs 3,129. The scrip has gained 8.5 per cent in the four sessions. The stock commanded a m-cap of Rs 20,84,040 crore on Friday compared with m-cap of Rs 19,50,703.82 crore on June 24.

RJio has hiked its tariff for prepaid and postpaid plans by about 20 per cent but not for Jio phone users. The hike, the first in two years, should increase average revenue per user (ARPU) by 15 per cent to Rs 206, said Motilal Oswal Financial Services as it sees exit ARPU of Rs 223 for FY25).

"This should drive a 17 per cent increase in our Ebitda estimates, assuming no major subscriber loss for RJio as its plans would be the cheapest and best network among all telcos. Thus, we build in a 23 per cent Ebitda CAGR over FY24-26E," it said.

MOFSL values Reliancet Jio at an EV/Ebitda multiple of 12 times on FY26 Ebitda basis, thereby arriving at a valuation of Rs 840 per share (Rs 810 earlier), adjusted for its 66 per cent stake. Consequently, it upped its target price on RIL to Rs 3,275 from Rs 3,245 previously.

Jefferies has suggested a 'Buy' call on reliance Industries and raised its target to Rs 3,580. Morgan Stanley retained its 'Overweight' call with a target of Rs 3,046.

Kotak Securities said RJio has raised tariffs by 17-25 per cent on popular pre-paid plans and by 17 per cent on entry-level postpaid plans. Further, R-Jio has also restricted unlimited 5G data usage to 2GB/day and above plans (versus Rs239 and above plans earlier), which could potentially lead to up-trading by higher data consumers.

"While the quantum of tariff hikes is in line with our estimates, R-Jio taking the lead in raising tariffs and shifting focus to improving returns on investments is a sentimental positive. We expect Bharti and Vi to also raise tariffs soon," it said.

This brokerge has a target price of Rs 3,300 for RIL.

"We reiterate that industry ARPU is likely to grow at 10-12 per cent CAGR to Rs 300 in the next 3-4 years given the consolidated industry structure, and higher ARPU requirement for Jio also to justify significant 5G capex and given Jio's potential IPO," Centrum Broking said.