Buy Jio Platforms; target of Rs 1515: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Strong margin delivery: Jio Platforms (JPL) reported an in-line 2QFY27 revenue growth, driven by a 1.5% QoQ ARPU uptick and 9m subscriber net adds. The company's EBITDA margin expanded by 105bp QoQ to 55.7%, driven by robust incremental margin in Rjio.
  • FCF inflection: JPL's consolidated cash capex moderated sharply to INR106b in 1HFY27, leading to an inflection in FCF generation to INR189b. The company is expected to generate a cumulative FCF of INR1.68t over FY27-29 and achieve net cash status by FY29.
  • Digital ecosystem expansion: JPL is leveraging its connectivity platform and distribution capabilities to offer both proprietary and partner-led products and services across entertainment, AI, financial services, and productivity. The company's digital ecosystem is driving customer engagement, with monthly data consumption per customer being 1.3x that of its nearest competitor.
  • Growth strategy: JPL's growth strategy is centered on proprietary technology, digital distribution, enterprise, and international opportunities. The company aims to extend its market leadership in Wireless and Home Broadband, while the scale of its digital offerings and potential international tie-ups provide growth and valuation upsides.

Thesis Validation Checklist

  • Margin expansion: Watch for continued margin expansion, driven by higher incremental EBITDA margins and faster-than-expected inflection in FCF.
  • FCF generation: Monitor JPL's FCF generation, which is expected to be driven by moderation in cash capex and higher EBITDA margins.
  • Digital ecosystem growth: Track the growth of JPL's digital ecosystem, including the expansion of its digital offerings and potential international tie-ups.
  • Subscriber additions: Keep an eye on JPL's subscriber additions, which are expected to be driven by the company's strong brand and distribution capabilities.