---
endpoint: analytics
pattern: 03 · House view · stance
status: done
latency_ms: 223743
conversation_id: e118718c-4ec5-444b-a43d-14d9dee5c066
citations: 0
created: 2026-05-31 17:00:03Z
---

# What is our current stance on Reliance Jio post-tariff hike?

# CLSA Stance on Reliance Jio Post-Tariff Hike

**Bottom line:** CLSA's position on Reliance Jio is best read through its **Outperform (O-PF) rating on parent Reliance Industries (TP Rs1,650, +14% upside)** [6][4]. Jio is a *positive contributor* to the RIL thesis — tariff-hike flow-through and subscriber re-acceleration are flagged as key catalysts [3] — but within India Telecoms standalone, **Bharti Airtel remains the sector top pick over Jio**, because Bharti has extracted more value from the Jul-24 tariff hike than Jio has [13][15].

---

## 1. The Headline View on Jio (as expressed through RIL coverage)

The latest dedicated RIL note — *"Triggers ahead"* (24 Jun 2025) — frames Jio as a near-term re-rating catalyst:

- **Rating reiterated O-PF, TP Rs1,650, 14% upside** [6][4][1].
- **Subscriber inflection underway**: Jio added ~2.6m mobile subs in April 2025 alone; 1QFY26 net adds expected to reach **c.9-10m vs only +6m in all of FY25** — the consolidation phase is ending [5][1].
- **Investment thesis explicitly leans on tariff-hike flow-through**: *"Strong growth momentum in Jio led by tariff hikes, along with steady streamlining of retail operations… will drive a significant upside for the stock."* [2]
- **Catalysts named**: flow-through of recent tariff hike for Jio, Jio AirFiber-led broadband ramp, and **a possible Jio IPO over the next 12-15 months** [3][7].
- **A faster pick-up in Jio's subscriber additions is flagged as a key upside risk** to the TP [4].

## 2. SOTP — How Jio Maps Into RIL's Valuation

In CLSA's Rs1,650 SOTP, Jio is by far the most valuable single business [8]:

| Component | Rs/share | EV (US$bn) | Multiple |
|---|---|---|---|
| Reliance Jio (RIL's stake) | **454** | 71.9 | — |
| Jio mobile business EV | 793 | 125.5 | **13.2x FY27 EV/Ebitda** (in-line with Bharti) |
| Less: Jio net debt | (109) | (17.3) | |
| Less: minority interest (33.57%) | (229) | (36.3) | |
| O2C (standalone) | 384 | 60.8 | 8x FY27 EV/Ebitda |
| Reliance Retail | 525 | 83.1 | 28x EV/Ebitda |
| New Energy | 235 | 37.2 | DCF |
| **Total fair value** | **1,649** | **261** | 12.1x FY27 EV/Ebitda |

Jio is valued at parity with Bharti on EV/Ebitda — i.e., CLSA does **not** assign Jio a premium for its larger subscriber base/share lead [8].

## 3. Post-Tariff Hike Reality Check — Jio Has Underperformed Bharti on Flow-Through

This is the critical nuance behind the "positive but not the top pick" framing. The Jul-24 industry tariff hike (11-25% headline) flowed through unevenly:

**ARPU flow-through 1QFY25 → 3QFY25 (pre-hike vs. post-hike)** [14]:

| Operator | 1QFY25 ARPU (Rs) | 3QFY25 ARPU (Rs) | Increase |
|---|---|---|---|
| Bharti India Mobile | 211 | **245** | **+16%** |
| Bharti Hexacom | 205 | 241 | +18% |
| **Reliance Jio** | **182** | **203** | **+12%** |
| Vodafone Idea | 165 | 183 | +11% |

- **Bharti's ARPU premium to Jio widened to 21% in 3QFY25 (from 14% in 3QFY24)** — i.e., the gap got worse post-hike, not better [15][16].
- **Bharti's India mobile Ebitda growth (30% YoY) was 13ppt ahead of sector-leader Jio's** in 3QFY25 [16].
- **June-25 roadshow color**: *"Investors are surprised as to why flow through of tariff hikes varies for Bharti vs RJio and also Bharti share gains (170bps in 12M) are ahead of RJio in ongoing consolidation."* [9]

**Updated Jul-24 ARPU flow-through (per 25-Jun-2025 roadshow note)** [9]:

| Operator | Flow-through |
|---|---|
| Bharti | +16% |
| Bharti Hexacom | +18% |
| **Reliance Jio** | **+14%** |
| Vodafone Idea | +11% |

Reasons cited for Jio's weaker flow-through: a higher mix of subscribers on entry-level/JioBharat plans, lower postpaid penetration, and absence of comparable upgrade-to-5G monetisation that Bharti is capturing.

## 4. Market Share — Jio Still #1 but Bharti Closing the Gap

- **FY25 (full year)**: RJio leads at 41.8% revenue share, but **gained only +0.4ppt YoY**; Bharti gained +1.7ppt to 38.7%; VIdea lost 1.6ppt to 14.1% [17].
- **3QFY25**: RJio's share *fell* 37bps QoQ to 41.3%; Bharti gained 48bps to 39.1% — first time the title note flagged *"Reliance Jio's dip in market share"*.
- **4QFY25**: Jio bounced back — +92bps QoQ to 42.2% (RJio +3% QoQ, +16% YoY revenue).
- **Combined RJio + Bharti = 81% of sector revenue; CLSA models this rising to 85% by FY27** as VIdea continues to lose share [17].

## 5. Forward Estimates for Jio (CLSA Model)

| Key Assumptions | FY24 | FY25CL | FY26CL | FY27CL |
|---|---|---|---|---|
| End-of-period subscribers (m) | 482 | 488 | 515 | 539 |
| ARPU (Rs/month) | 182 | **196** | **215** | **231** |
| Revenue (Rsbn) | 1,001 | 1,141 | 1,297 | 1,461 |
| EBITDA (Rsbn) | 524 | 603 | 701 | 813 |
| EBITDA margin (%) | 52.4 | 52.8 | 54.1 | 55.6 |
| PAT (Rsbn) | 205 | 248 | 267 | 296 |

[11] — Jio's FY25-27CL Ebitda CAGR is forecast at **16.2%**, second only to ITC/L&T and ahead of Reliance consolidated (11.2%) [12].

## 6. Forensic Read — What CLSA Is *Not* Saying

Three things stand out in the "negative space" of the recent notes:

1. **No standalone "Buy Jio" recommendation** — Jio is owned only through RIL; CLSA's positive view is expressed via the RIL O-PF, not a dedicated bull case for Jio standalone.
2. **CLSA is positive on Jio but explicitly says Bharti is the better expression of the same theme**: *"We remain positive on RJio but Bharti remains our pick with leading ARPU and growth."* [13]
3. **The Jio IPO is treated as a stock catalyst, not a thesis** — i.e., the AGM in Aug/Sep 2025 is positioned as an event-driven re-rating trigger for RIL rather than an entry-point recommendation for Jio itself [7].

## 7. Synthesised Stance

| Dimension | CLSA View |
|---|---|
| **Direct rating on Jio (standalone)** | Not listed — owned via RIL |
| **Rating on parent RIL** | **O-PF, TP Rs1,650, +14% upside** [6][4] |
| **Sector pick** | **Bharti Airtel** (not Jio) [13] |
| **Tariff-hike flow-through verdict** | Weaker than Bharti (+12-14% vs +16-18%) [14][9] |
| **Subscriber trajectory** | Re-accelerating after FY25 consolidation; 9-10m adds in 1QFY26 [1][5] |
| **Near-term catalyst** | Tariff-hike flow-through + Jio IPO at AGM (Aug-Sep 2025) [3][7] |
| **SOTP contribution** | Rs454/share — largest single subsidiary value [8] |
| **EV/Ebitda multiple ascribed** | 13.2x FY27 (parity with Bharti — no premium) [8] |

**In one sentence:** CLSA is constructively positioned on Jio as the *biggest single value lever within Reliance Industries* (O-PF, TP Rs1,650) — with tariff-hike monetisation and a potential Jio IPO as the key 12-15 month triggers — but flags that Bharti Airtel has captured a disproportionate share of the post-Jul-24 tariff hike, making Bharti, not Jio, the firm's preferred standalone telco exposure [4][13][9].

---

**Sources**
[1] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF
[2] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF
[3] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF
[4] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF
[5] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF
[6] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF
[7] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF
[8] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 Jun 2025) — 607962717LinqAlpha.PDF (SOTP table)
[9] India Telecoms (Roadshow feedback) — CLSA (25 Jun 2025) — 607962760LinqAlpha.PDF
[10] India Telecoms (Roadshow feedback) — CLSA (25 Jun 2025) — 607962760LinqAlpha.PDF
[11] India Telecoms (Roadshow feedback) — CLSA (25 Jun 2025) — 607962760LinqAlpha.PDF (Jio summary income statement)
[12] India Telecoms (Roadshow feedback) — CLSA (25 Jun 2025) — 607962760LinqAlpha.PDF (EV/Ebitda comp)
[13] India Telecoms — Varying flow-through of tariff hikes — CLSA (19 Feb 2025) — 607951047LinqAlpha.PDF
[14] India Telecoms — Varying flow-through of tariff hikes — CLSA (19 Feb 2025) — 607951047LinqAlpha.PDF (ARPU flow-through table)
[15] India Telecoms — Varying flow-through of tariff hikes — CLSA (19 Feb 2025) — 607951047LinqAlpha.PDF
[16] India Telecoms — Varying flow-through of tariff hikes — CLSA (19 Feb 2025) — 607951047LinqAlpha.PDF
[17] India Telecoms — Duo's dominance in growing market — CLSA (9 Jun 2025) — 607961570LinqAlpha.PDF

