Is Jio's IPO Valuation Fair? Jio vs Airtel on P/E, EV/EBITDA, ARPU, and Margins

Jio is cheaper than Airtel on one ratio and costlier on another. Both statements are true. Jio Platforms' IPO gives investors a way to compare its telecom and digital business with Bharti Airtel, but the answer depends on the valuation measure used. Here is what the available figures show and what they cannot tell you.

Jio Platforms has a market value of ₹10.30 lakh crore at the top of its IPO price band. Its profit for FY26 is ₹30,049 crore, so the P/E comes to about 34.3x. The EV/EBITDA is around 10.5 to 10.9x, while Airtel is at 9.2x. Airtel also has higher ARPU and EBITDA margin, but these numbers alone cannot show if Jio’s price is fair.

Jio IPO valuation is the value the market places on Jio Platforms based on its IPO price. The announced price band is ₹1,065 to ₹1,119 per share. At the upper end, the company is valued at about ₹10.30 lakh crore. The market price after listing may be different.

Valuation ratios compare a company's price with measures such as profit or operating earnings. Each ratio answers a different question, so looking at only one can leave out important information.

The price-to-earnings ratio, or P/E, compares a company's market value with its annual net profit.

For example, if a company has a market value of ₹1,000 crore and annual profit of ₹50 crore, its P/E is 20x.

Formula: P/E = Market capitalisation ÷ Annual net profit.

A higher P/E may reflect expectations of future growth. It can also mean the market is paying more for each rupee of current profit. A lower P/E does not automatically mean a company is better valued.

Enterprise value-to-EBITDA compares the value of a business, including its debt and cash position, with earnings before interest, tax, depreciation and amortisation.

For example, an enterprise value of ₹500 crore divided by EBITDA of ₹50 crore gives an EV/EBITDA ratio of 10x.

This measure helps compare businesses with different financing structures. However, EBITDA does not deduct interest, tax or capital spending. Those costs still matter, especially for telecom companies that invest in networks and spectrum.

Average revenue per user, or ARPU, measures the average revenue earned per user over a stated period. For example, ₹2,00,000 in monthly revenue from 1,000 users gives a monthly ARPU of ₹200.

ARPU can change with plan prices, customer mix and service use. A higher figure does not, by itself, prove that a company performs better overall.

ARPU and margin are from published comparisons, whereas the EV/EBITDA was obtained from Reuters. The P/E figures use different reporting dates, so they are not a perfect like-for-like comparison.

Using the stated market value and FY26 profit:

• Implied market capitalisation: ₹10,30,491 crore

• FY26 net profit: ₹30,049 crore

Using a market capitalisation of ₹10,30,491 crore and FY26 profit of ₹30,049 crore, Jio's P/E is about 34.3x. This is a calculation, not a forecast. The ratio changes when the market value or profit changes. Comparisons also depend on using the same earnings period and a comparable price date.

While Jio Platforms consists of the combination of connectivity and digital products, Airtel’s business portfolio is not the same as that of Jio. Their revenue streams and investments are also not the same.

Jio's RHP reports FY26 revenue of ₹1,46,885 crore and EBITDA of ₹76,255 crore. From FY24 to FY26, revenue and EBITDA grew at annualised rates of 15.79% and 17.79%, respectively. For FY26 to FY29, Motilal Oswal estimates annual EBITDA growth of 15.2% for Jio and 14.6% for Airtel. These are analyst estimates, not guaranteed results.

Earlier reports discussed a Jio Platforms valuation of around $133 billion, compared with an implied IPO valuation of up to $108 billion. The estimates may use different dates and assumptions, so they are not directly comparable.

Jio’s P/E works out to about 34.3x its FY26 profit. But on EV/EBITDA, Nomura’s estimates put Jio above Airtel. Airtel also reports higher ARPU and EBITDA margin. So the two companies look different depending on the valuation measure used.

Before creating a view, ask to yourself: Are the ratios based on comparable data? How much weight should higher ARPU and margins carry? Does Jio's digital business affect how it should be valued? How much expected growth is already reflected in the IPO price?

Ans. Jio's P/E is about 34.3x, based on an implied market capitalisation of ₹10,30,491 crore and FY26 profit of ₹30,049 crore. The ratio depends on the figures used.

Ans. The reported figures put Airtel's ARPU at ₹257.2 and Jio's at ₹214. Differences in pricing, customer mix and service use can affect ARPU.

Ans. EV/EBITDA compares a company's enterprise value with its operating earnings before interest, tax, depreciation and amortisation. It does not account for all costs, including capital spending.

Ans. Not completely, because their business mixes and financial structures differ. The dates and methods used to calculate their valuation ratios also matter.

Ans. Not necessarily. A lower P/E means the market value is lower relative to the profit figure used, but it does not account for every difference in growth expectations, risk, debt or business quality.

Sources

• SEBI, Jio Platforms Limited RHP, Reuters, Financial Express