Jio’s IPO Is Huge. That Is Not a Reason to Apply.

Everyone in my college group is applying for the Jio IPO. Almost nobody has read the prospectus. Using the product is not the same as understanding the business.

The biggest share sale in India

The Jio Platforms IPO opens on October 21 at a price band of ₹1,065 to ₹1,119 per share, with a minimum application of 12 shares, or about ₹13,400 at the top of the range. It is a fresh issue of around ₹30,000 crore, which would make it the largest share sale in Indian history. Because it is a fresh issue, the money goes to Jio itself, mostly to reduce debt and invest in its network, rather than to existing shareholders selling out.

In my B.Com class, the excitement is enormous. Several friends have asked their parents for money to apply. When I ask why, the most common answer is that Jio is huge and everyone uses it. That is true. It is also not, by itself, a reason to buy the shares.

Questions worth asking

A good company and a good investment are different things. The second depends on the price. Before applying for any IPO, I think a student should be able to answer a few questions from the prospectus. How does the company make money: mobile plans, home broadband, digital services? How much profit does it make, and is that rising? How much debt does it carry? And at the IPO price, how does its value compare with Bharti Airtel, its main competitor?

There are also questions about the market itself. The Nifty is close to its lowest level of the year, foreign investors have been selling, and interest rates were just raised. A ₹30,000 crore issue needs a lot of buyers at once. Big IPOs in weak markets sometimes list below their issue price, even when the company is excellent.

What I am doing

I am not telling anyone not to apply. Jio may turn out to be a great long-term holding. But the people in my group who are applying for a quick listing gain are making a bet on other people’s excitement, not on the business. If the listing disappoints on October 28, many of them will sell at a loss and decide the stock market is rigged.

My plan is simpler. I have read the summary of the prospectus, and I will decide whether I would be happy owning a small piece of Jio for five years at this price. If the answer is yes, I will apply with money I do not need for anything else. If not, I will watch from the side. Either way, the decision will be mine rather than the group chat’s, and that seems like the most useful habit an IPO can teach.