Reliance Jio is relatively better placed to monetise digital opportunities in the Indian telecom market with its digital assets valued at $15 billion, JM Financial Institutional Securities Limited said in a note.
The domestic brokerage firm JM Financial is banking on Jio’s potential to monetise the huge digital opportunity in India’s digital market.
“We ascribe an equity value of $15 billion for Jio’s Digital assets and the contribution of these assets into our target price for RIL (of INR 2,815/share) at ~INR 120/share; this valuation implies ~2.2x the investment of ~INR 512bn done by Jio to build its digital assets and is justified in our view given Jio’s ability to control those assets (B2C),” the brokerage said in its note.
“Jio clearly leads other telcos in the effort to monetise digital opportunities due to its large +416mn telecom subscriber base and stakes in various digital platforms, network effects due to presence of a large number of apps, which increases subscriber stickiness within the ecosystem and enables cross-selling of solutions; and an efficient business structure that clearly allows for the demarcation of the core connectivity business and the digital business,” JM Financial said.
Jio has evolved from a pure-play telecom provider to a tech enabler, according to JM Financial. “Currently, Jio houses the enterprise and consumer suite of apps as well as the infrastructure business of Jio’s payment app (design, development and operation of the app),” they said. The brokerage believes Jio is better placed to take advantage of digital monetisation opportunities due to its stake in various digital/tech platforms. JM Financial highlighted that India’s digital market is likely to grow 4-5x to $1 trillion by the financial year 2024-25. Jio’s digital assets are valued at $15 billion by the brokerage firm.