Jio’s planned mega IPO in the first half of 2026 could turn into an important re‑rating catalyst for Bharti Airtel, with Jefferies arguing that tariff hikes and higher sector weight in indices will work in Bharti’s favour rather than against it. The brokerage has raised its target price on Bharti Airtel to Rs 2,760, implying about 32% upside from current levels and reiterating the stock as its top pick in the Indian telecom industry.

Billionaire Mukesh Ambani had last year guided to listing Jio Platforms Ltd (JPL) in the first half of the calendar year 2026. Analysts say that it could largely be an offer for sale by financial investors, while strategic shareholders such as Reliance, Meta, and Google are expected to stay invested.

Jefferies argues that once Jio is listed, public market scrutiny will sharpen the operator’s focus on monetisation and returns, making fresh mobile tariff hikes in 2026 more, not less, likely.

According to Jefferies’ sensitivity work, a 10–20% tariff increase is needed in FY27 for Jio’s equity valuation to move closer to Bharti’s and to deliver a double‑digit internal rate of return to existing private‑equity investors. Without such hikes, Jio’s FY27 EBITDA could be about 14% lower at around US$8.5 billion, capping investor IRRs at roughly 6–8%, versus a potential 8–14% IRR if tariffs are raised and the stock commands 12–15 times EV/EBITDA.

Why Bharti may re‑rate alongside Jio

Jefferies argues that Jio’s IPO is unlikely to act as an overhang for Bharti, citing the stock’s 32% gain in 2025 despite more than $5 billion of promoter share sales.

Instead, with Bharti’s India (ex‑towers) business already trading around 13 times EV/EBITDA, the brokerage expects Jio to be priced off Bharti’s multiples, leaving limited room for Bharti to de‑rate and opening scope for a further re‑rating as the listing approaches.

Jefferies estimates that once Jio is included in major benchmarks with a roughly 33% free float, the neutral weight of telecom in headline indices such as Nifty50 and MSCI India could rise from about 4–5% to 7–8%. Any incremental passive and benchmark‑driven flows into the sector are therefore likely to benefit Bharti along with Jio, especially if some rotation out of Bharti to fund the IPO is offset by higher overall sector allocation.

Sector backdrop: tariffs, AGR relief and growth

The Jio IPO thesis is set against a constructive sector backdrop in 2026, with Jefferies expecting a 15% across‑the‑board mobile tariff hike in June 2026 – two years after the last round – as operators pivot from market share grabs to monetisation. The brokerage sees scope for sector revenues to accelerate to 16% year‑on‑year growth in FY27, powered by ARPU expansion of about 14% and underpinned by still‑low mobile revenue‑to‑GDP and ARPU‑to‑per‑capita‑GDP ratios in India.

On Vodafone Idea, Jefferies highlights that a potential five‑year moratorium on AGR dues could cut the operator’s government‑dues outflows by 35–85% over FY26–30, improving its chances of raising capital and stabilising the market.

However, the brokerage calculates that VIL would still need a cumulative 45% tariff hike over FY27–30 just to meet spectrum and AGR commitments, reinforcing the case for an industry‑wide move towards higher pricing.

Bharti’s numbers: multiple growth levers

Within this backdrop, Jefferies expects Bharti Airtel to deliver consolidated revenue growth of about 17% year‑on‑year in FY27, led by 19% growth in the India mobile business and 20% growth in the international portfolio. Consolidated EBITDA is projected to grow 18% in FY27, with margins holding around 56%, while moderating capex intensity at 20–21% of sales supports a 19% jump in free cash flow to roughly ₹540 billion.

On a three‑year view, Jefferies builds in about 25% cumulative mobile tariff hikes over FY27–28 for Bharti, translating into roughly 16% ARPU CAGR between FY26 and FY28, and 18–19% annual growth in India mobile revenues and EBITDA. The report highlights additional growth optionality from enterprise, data centre and cloud services – currently about 2% of India ex‑towers revenues – which could add 1–3 percentage points of incremental growth each year over the next five years as these businesses scale.

Besides increasing Airtel’s target price from Rs 2,635 to Rs 2,760, Jefferies has also raised Indus Towers’ target from Rs 425 to Rs 510.

“While telecom operators (Bharti Airtel/Bharti Hexacom – BUYs) are well positioned to deliver a pickup in growth and potentially re-rate in the run-up to Jio’s IPO, Indus Towers’ (BUYs) could also re-rate, thanks to Govt.’s relief measures and VIL’s potential capital raise. Bharti Airtel remains our top pick, given its strong growth outlook, improving FCF and rising payouts,” it said.