Is the NSE IPO coming Soon? A Comprehensive Overview
NSE IPO Details and Status
The National Stock Exchange of India Ltd. (NSE) is planning an initial public offering (IPO). The IPO will be a book-built issue, with 11.14 Cr shares being offered to the public, as per its DRHP dated 28 December 2016. The shares will be offered in the following categories: Qualified Institutional (maximum 50%), Non-Institutional (minimum 15%), and Retail Individual (minimum 35%). The dates, issue size and price band for the IPO are yet to be announced. The company reapplied for the market regulator's approval in August 2024, but the Indian market regulator has yet to provide a valid justification for withholding permission for the IPO.
NSE's Market Position
NSE holds a dominant position in the Indian capital market and equity derivative segments. It has a 92.7% market share in cash equities, 99.9% in Equity Futures, and 96.9% in Equity Options. NSE is the world's largest derivatives exchange by trading volume and the third-largest in cash equities by the number of trades. The exchange also provides co-location facilities for high-volume and high-frequency traders.
Financial Performance and Growth
Between 2019 and 2024, NSE demonstrated remarkable financial growth, with sales growing more than fivefold from ₹3,027.79 crores to ₹16,433.61 crores and net profits soaring more than fourfold from ₹1,708.04 crores to ₹8,305.74 crores. The company’s profit before tax also surged from ₹2,576.21 crore in FY19 to ₹11,184.28 crore in FY24. NSE has achieved this growth while maintaining an asset-light business model and avoiding reliance on debt. By FY24, its total assets had grown significantly to ₹65,464 crore from ₹19,978 crore in FY19. A major portion of its revenue, 73.8%, comes from transaction charges, followed by 5.4% from co-location charges and 10.79% from other fees, underscoring its strong and diversified revenue streams.
Legal Challenges and Resolutions
Recently, NSE has faced several legal challenges related to co-location, dark fibre, corporate governance, conflict of interest, trading access point (TAP), and interoperability. However, Nuvama Institutional Equities stated that NSE is on track to overcome these issues. SEBI recently disposed of a show cause notice against NSE and its former executives in the co-location case due to insufficient evidence. The Securities Appellate Tribunal (SAT) dismissed SEBI’s appeals on corporate governance and conflict of interest matters in July. NSE also settled SEBI's probe into TAP system violations by paying Rs 6.43 billion in September 2024 and resolved interoperability non-compliance issues by paying Rs 271.3 million in November 2023.
Unlisted Share Price and Valuation
As of January 13, NSE is trading at Rs 1,800 per share in the unlisted market. The unlisted shares are currently quoted at Rs 7,300 per share on WWIPL (Wealth Wisdom India Private Limited). In November 2024, NSE issued four bonus shares for every one share held, resulting in a subdivision of shares.
Key Investors
Key domestic investors in the NSE include Life Insurance Corporation (LIC), which holds a 10.72% stake, Stock Holding Corporation of India, which holds a 4.44% stake, and Radhakishan Damani (who owns a 1.6% stake). SBI Capital Markets holds approximately 4.4%, while the State Bank of India (SBI) owns 3.23%.
Future Growth Prospects
The Indian economy is rapidly growing, and the increasing digitization and formalization of the economy are projected to drive growth in the financial sector. NSE is well-positioned to capitalize on this growth with its innovative products and services. The surge in retail investor participation also points to a demand for new offerings.
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Disclaimer: This news is solely for educational purposes. The securities/investments quoted here are not recommendatory.