Jio Platforms’ first results as a listed company were solid. Profit rose 14%, margins widened and 5G users passed 300 million. But revenue per user rose only modestly and there was no tariff increase, the factor many investors are counting on to support the stock’s 27% listing gain.
Two days after one of India’s largest stock market debuts, Jio Platforms reported its first quarterly results as a listed company.
Consolidated net profit attributable to shareholders rose 13.7% to ₹8,389 crore in the September quarter, from ₹7,379 crore a year earlier. Revenue rose about 11%. EBITDA grew 16.6% to ₹21,879 crore, and the EBITDA margin widened to 51.64% from 49.83%.
Those are strong margins for any company. Jio converts more than half its revenue into operating profit, a sign of the scale it has built since launching in 2016.
ARPU: the key number
Investors focus on average revenue per user (ARPU), because it shows how much Jio earns from each customer. This quarter, ARPU rose to ₹218.8, higher than both the previous quarter and a year ago.
The increase came from a better customer mix and higher data use. Promotional offers on fixed broadband, where Jio is discounting to attract home customers, partly offset those gains.
The more important point is what did not happen: there was no tariff increase. Indian telecom investors have long expected Jio, Airtel and Vodafone Idea to raise prices again, which would lift ARPU and profits sharply across the industry. Until that happens, Jio’s ARPU will rise only gradually through mix and data use.
5G adoption
Jio said it now has more than 300 million 5G users, over 56% of its customers. The company spent heavily to build its 5G network quickly, and that spending is now becoming customer usage. Higher data use per customer will eventually help justify higher prices.
Can it support the valuation?
Jio closed its first day at ₹1,417.50, giving it a market value above ₹13 lakh crore. Taking this quarter’s profit and multiplying by four gives annual profit of roughly ₹33,500 crore, which implies a price-to-earnings ratio of almost 40.
That is high for a telecom company. It assumes significant growth ahead, from tariff increases, home broadband, enterprise services and digital platforms. This quarter showed steady progress, but not the faster growth that would justify that valuation on its own.
What to watch
Jio’s free float is under 3%, so trading in the stock will be driven more by limited supply and index-related buying than by one quarter’s results. Over the next few quarters, investors will watch for three things: whether Jio raises tariffs; whether home broadband growth starts to show in earnings; and whether ARPU can approach Airtel’s levels.
This quarter did not disappoint, but it did not answer the main question either: when will Jio raise prices?
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