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Shares of Indian billionaire Mukesh Ambani's Jio Platforms Ltd. are changing hands about 22% above their initial public offering price in India's unofficial gray market, a day before the company makes its stock market debut.
The premium has held at around that level for about 10 days. Jio, the telecom and digital arm of Ambani's Reliance Industries Ltd., begins trading on the BSE and the National Stock Exchange of India on Wednesday, Oct. 28.
Jio sold shares at 1,065 to 1,119 rupees each, raising about 302 billion rupees ($3.2 billion) through the sale of up to 270 million new shares. At the top of the range, the company is valued at about 10.3 trillion rupees ($108.3 billion).
A 22% gain from the top of the range would put the stock near 1,365 rupees and lift Jio's market value to about 12.6 trillion rupees ($132 billion). That would make it India's second most valuable listed company after its parent, Reliance, and push Bharti Airtel Ltd., currently worth about 11.6 trillion rupees, into third place.
Record demand
The offering drew bids worth more than 4.9 trillion rupees ($52 billion) from nearly 14 million applications, and it was fully covered within 100 minutes of opening on Oct. 21. By the close, the issue had been subscribed 22 times. Qualified institutional buyers bid for 71 times the shares set aside for them, wealthy individuals 14 times and retail investors 2.7 times.
The rush started before the public offer opened. Jio drew $25 billion in bids from anchor investors, the large institutions that agree to buy shares ahead of a public sale, for about $853 million of stock. Shares were allotted on Monday, and investors who received them are now watching the gray market for a sense of how the stock will open.
A research executive at Kantilal Chhaganlal Securities said a listing gain of 20% to 22% would give short-term traders "an excellent immediate window" to take profits. He pointed to Jio's operating profit margin of 51.91% and its 7,220 patent applications, and said long-term investors had reason to hold the shares.
Ravi Singh, chief research officer at Master Capital Services, said investors who received shares could consider booking part of their profit if the stock opens at a large premium. He advised new buyers not to chase it on the first day and to wait for the price to settle.
Gray market trading is unregulated, and its prices are no guarantee of where a stock will open.
What it means for Ambani
Reliance owned 66.43% of Jio Platforms before the offering and sold none of its shares, so all of the money goes to Jio. Meta Platforms Inc. owns 9.98% and Google 7.73%. The offering is the largest in India's history, and Ambani's eldest son, Akash, the company's managing director, led the pitch to investors.
Ambani controls Reliance, which is the main source of his fortune. A strong debut would raise the market value of Reliance's stake in Jio and could lift his net worth with it.
Jio is India's largest mobile carrier, with about 533 million customers. Until now, investors could only buy into it through Reliance shares.
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