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Jio tariff hike: 5-7% upside to Jio estimates, 2% upside to RIL EBITDA estimate, says Nomura

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Nomura says, "On our estimates, there could be 5 percent/7 percent upside to our R-Jio average realisation per user/EBITDA estimates and around 2 percent upside to our RIL EBITDA and EV estimates". The brokerage firm expects market share gains to continue for Bharti Airtel and Reliance Industries' Jio, given Vodafone Idea's capital expenditure constraints and large near-term debt repayments.

Brokerage house Nomura sees upsides to its estimates for Jio as well as for Reliance Industries following Jio’s move to raise tariffs Sunday evening.
“Despite the hikes, we note R-Jio's discount to peers will remain largely intact (25 percent/8 percent on 28/84 days popular 1.5GB/d plan),” the Nomura note to clients said.
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The move limit potential churn among Bharti/Vi's lower-end subscribers, post near doubling of minimum recharge plan in the last 4 months to Rs 99, the note added.
“On our estimates, there could be 5 percent/7 percent upside to our R-Jio average realisation per user/EBITDA estimates and around 2 percent upside to our RIL EBITDA and EV estimates (Rs 46 per share),” the note said.
Nomura expects expect market share gains to continue for Bharti and Jio, given Vi's capex constraints and large near term debt repayments.
Nomura has a buy rating on Bharti with a target price of Rs 855 and a neutral rating on RIL with a target price of Rs 2,850.
 
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(Disclosure: Reliance Industries Ltd, which owns Jio, is the sole beneficiary of Independent Media Trust that controls Network18, the parent company of CNBCTV18.com.)

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