Jio IPO May Slip To H2 FY27 On Geopolitical Risks: CreditSight

Reliance Industries' planned listing of its digital arm Jio Platforms could be delayed to the second half of fiscal 2027 due to geopolitical tensions in the Middle East, CreditSights said on Wednesday.

In its commentary on FY26 earnings of India's most valuable company, CreditSights said the management in the earnings call shared that "the Jio IPO was imminent." Earlier market rumors reported that the IPO could come as early as May, with Reliance looking to shed 2.5-3 per cent stake from its existing 67 per cent stake in Jio for close to USD 4 billion (Rs 37,500 crore).

"We believe the Mideast conflict may delay Jio's IPO towards the second half of the year," CreditSights, part of the Fitch Group, said. "A Jio IPO will raise cash for debt repayment and capex, and improve Jio's competitiveness against rivals Bharti and Vodafone Idea." Reliance reported 2025-26 (FY26) revenue and EBITDA growth of 10 per cent and 8 per cent year-on-year, respectively, with retail and telecom continuing to lead performance. Its oils-to-chemicals (O2C) segment recovered from a low base despite disruptions linked to Middle East tensions.

"Management guided towards healthy FY27 (April 2026 to March 2027 fiscal) retail and telecom earnings growth, with O2C earnings remaining resilient but volatile as robust refining margins are met with higher crude sourcing, freight, and insurance costs," CreditSights said.

The company added that "prolonged lower cracker operating rates (Middle East and Asia) could support petchem spreads once feedstock volatility eases," highlighting its integrated operations, diversified sourcing network and high non-naphtha feedstock mix.

Capex, Deleveraging in Focus -------------------------------- Capital expenditure is expected to rise to Rs 1.5-1.6 lakh crore in FY27 from Rs 1.3 lakh crore a year earlier, largely funded through internal accruals and directed toward petrochemicals expansion, renewable energy, battery manufacturing and data centers.

The company management in the call said it is entering FY27 with a "strong balance sheet," with gross and net leverage improving to 2.8x and 2.0x, respectively. Net leverage is projected to decline further to 1.7x-1.8x, supported by earnings growth and potential IPO proceeds.

"The company's reported net leverage likely excludes leases and telecom deferred payment liabilities from debt, and includes other market-linked investments in cash," CreditSights said.

Major new energy projects include full commissioning of the 20 GW solar module and cell manufacturing, scaling up battery manufacturing capacities to 100 gigawatt-hours per annum (to commission first phase of 40 GWh this year), and progressive commissioning of 150 GW solar and green hydrogen projects in Kutch.

Data center investments have already started with more details to be given over the next few quarters.

"We don't expect Reliance to make outsized investments for its US refinery project that US President Trump earlier referred to as a "historic USD 300 billion deal". We believe the USD 300 bn figure refers to the total value of 20-year purchases of US shale oil and refined products by Reliance for the refinery, with actual capex small at less than USD 1 billion (Rs 9,400 crore)," it said.

Outlook --------- CreditSights expected O2C earnings to benefit from elevated transportation fuel margins driven by the Middle East conflict, particularly in export markets. However, petrochemical spreads remain weak due to global oversupply.

Retail and telecom are seen as key growth drivers, supported by resilient demand and steady subscriber additions. The telecom sector could also see tariff hikes in the second half of FY27, while management guided for 4-5 per cent organic average revenue per user (ARPU) growth in the absence of price increases.

New energy businesses, including solar manufacturing and renewable capacity additions, are expected to begin contributing to earnings.

"Our key expectations include: O2C EBITDA to benefit from elevated transportation fuel cracks led by the Mideast war. Transportation fuels typically form 60-66 per cent of Reliance's total production. The gains will likely be realised more from exports (40-45 per cent of production) that enjoy better cost passthroughs, versus domestic sales that are more constrained by government-administered pricing," it said.

While petchem spreads, especially polyethylene (PE) and polypropylene (PP), remain weak, management believes continued Mideast cracker shutdowns and reduced Asian cracker operating rates could drive an accelerated recovery of spreads.

"Despite high naphtha prices, we think the impact on margins is mitigated by Reliance’s diversified feedstock sourcing mix (about 25 per cent naphtha only, rest formed by less-volatile off-gases and ethane) and integrated operations facilitating raw material diversion towards higher-margin products," it said.

Supply security remains in focus, but Reliance is better-positioned given its diversified sourcing network outside the Mideast (US, Canada, South America, Russia etc.).

"Retail and telecom remain the bright spots. We expect retail demand to remain resilient, with management guiding for good growth across store count, square footage per store, and store efficiency. We also expect telecom demand to remain sturdy, and see prospects of industry-wide tariff hikes potentially in F2H27," CreditSights added.

New energy businesses are expected to begin contributing to earnings, including from the solar module manufacturing unit and renewable capacities at Kutch.