Reliance Industries shares zoom 3% on Jio prepaid tariff hike

Shares of Reliance Industries rose 3.55 per cent to hit an intraday high of Rs 2,497.90 on BSE after Reliance Jio raised prices of its voice and data plans for its prepaid customers.
 
The company has hiked the prices of its plans by up to 21 per cent. The new rates would be applicable from December 1, Reliance Jio said in a release.
 
The large-cap stock opened at Rs 2,412.00 against the previous close of Rs 2,412.15. With a market capitalisation of more than Rs 15,80,000 crore, the shares stand higher than 5 day, 100 day and 200 day moving averages but lower than 20 day and 50 day moving averages.
 
The stock has gained 29 per cent in the last one year and has risen 25 per cent since the beginning of this year.
 
The JioPhone Plan, which used to cost Rs 75 earlier for 28 days, will now cost Rs 91, while the Rs-129 voice and data plan would now cost Rs 155 for 28 days as per the revised tariffs.
 
Brokerage firm Motilal Oswal said Reliance Jio, being the leader in terms of market share and the most aggressive player in terms of pricing and subscriber growth, is in some way the price maker in the market and, therefore, the pricing it adopts has to be followed by peers.
 
“RJio tariff hike is across all price plans including on Jiophone’s lowest 28-day plan. This is better than our expectation of a tariff hike in only the smartphone category. Thus, the 20 per cent tariff hike may lead to incremental revenue/EBITDA of Rs 15,000crore/9700 crore i.e. 20%/27% upside on 2QFY22 annualized basis factoring 65 per cent incremental EBITDA margin. This will also increase the overall ARPU from 145 to 175,” it noted.
 
“We expect revenue CAGR of 10 per cent and EBITDA growth of 16 per cent over FY21–24E on the back of an 8 per cent subscriber CAGR over FY21–24E. This would increase our EBITDA estimates by 27 per cent implying FY23/24E EBITDA of INR550b/616b respectively and an EBITDA CAGR of 26 per cent,” it added.
 
The brokerage firm has a ‘Buy’ call on the stock with a target price of Rs 2,900 per share.
 
During the July-September period, Jio’s ARPU stood at Rs 143.6, while that of Airtel was at Rs 153. For Vodafone Idea, it was at Rs 109.
 
Bharti Airtel was the first company to announce a price hike on November 22. It was followed by a similar announcement by Vodafone Idea a day later.