Jio Platforms opens at 21.5% premium in India's biggest IPO

Jio Platforms shares gained 21.5% on Wednesday following their first day of trading.

The stock closed at 1,360 rupees, giving the company a market value of 12.5 trillion rupees. That figure equals $131 billion and makes Jio the second most valuable firm in India. Only its parent, Reliance Industries, holds a higher valuation.

The listing was the largest initial public offering in Indian history. The company sold 270 million shares at a price of 1,119 rupees each. It raised 302 billion rupees, or $3.2 billion, from the sale.

Demand for the stock was heavy across all investor groups. The issue was subscribed 22 times over in total. Institutional investors drove the bulk of that demand, with their portion booked 70.55 times. Retail investors subscribed 2.72 times. Akash Ambani, the company's managing director, said the IPO was fully subscribed within 95 minutes of opening on Oct. 21.

Large global funds participated in the anchor portion of the deal. BlackRock, Capital Group, and GIC were among the buyers. Including the anchor investors, the offering attracted $78 billion in demand.

Nomura issued a buy rating for the stock on Wednesday. The firm set a target price of 1,340 rupees, which is 19.7% above the IPO price. Nomura noted that Jio's capital expenditure cycle is mostly complete. This should lead to a sharp rise in free cash flow.

Deven Choksey, founder of DRChoksey FinServ, said inclusion in major benchmark indices will help protect the share price from oversupply. He noted that Jio is likely to join the MSCI index and the Nifty 50 within six months. That timing may coincide with some early investors looking to exit their stakes.