The NSE IPO was fully booked on its second day of bidding, receiving healthy investor participation and being subscribed 1.16 times. The stock exchange’s IPO received bids for 10.28 crore shares against its ask of 8.86 crore shares.
The issue, which was undersubscribed on its first day of bidding, was oversubscribed in almost all segments, except for the retail applicant portion, which has been booked 72% so far. India’s largest stock exchange has fixed its issue price band at Rs 1,700 to Rs 1,785 per share, and investors who wish to apply can bid in lots of eight shares and thereafter.
The Rs 22,562 crore issue that was launched after nearly a decade has so far attracted 20.33 lakh applications, and eligible employees get a discount of Rs 170 per share.
While the issue has been oversubscribed, analysts remain split on its valuation, noting that streets had expected a larger offer size. “Against the backdrop of volatile market conditions and a more price-sensitive investor environment, some existing institutional shareholders appear to have recalibrated their dilution plans,” said Vincent K A, Senior Research Analyst at Geojit Investments.
He explained that markets may prefer to wait for a more favourable window that could support their valuation expectations “As such, the reduction in stake sales appears more reflective of valuation and market conditions than a reassessment of the underlying business fundamentals,” the analyst added.
Over the past few sessions, the exchange’s grey market premium has declined sharply and was last quoted at Rs 121, suggesting a listing price of Rs 1,906 based on the upper end of the price band.
This reflects gains of nearly 7% per share and a profit of Rs 968 per lot. However, readers must know that GMP is an informal, unregulated trade rate, which is highly vulnerable to market manipulation and does not guarantee profits.
NSE is expected to list on BSE by September 24, and investors who have bid for the issue are wondering what could be the likely listing price. “We expect modest listing gains in the range of 6%–8%. However, given NSE’s near-monopolistic market leadership, superior operating margins, and a reasonable valuation discount compared to BSE, the risk-reward ratio remains compelling,” said Vipin Kumar, Assistant Vice President of equity research at Globe Capital Markets, noted that
The brokerage advises investors to look past the near-term regulatory headwinds in index options and hold shares from a medium-to-long-term perspective.
Giving the IPO a ‘Subscribe’ rating, Angel One, in a report, said, “At the upper price band of Rs 1,785, NSE is valued at a post-issue P/E of 35.4x, compared with BSE’s P/E of 54.2x, making the issue attractive relative to its key listed peer.”
The IPO will close its bidding window on September 21, and its share allotment process is expected to wrap up by September 22. Bidder are expected to receive their refund and due shares by September 23.
India’s largest stock exchange is expected to list on the country’s oldest exchange, BSE, on September 24.
The IPO is being handled by twenty merchant bankers, including marquees like Morgan Stanley India, Citi Global Markets, HSBC Securities, and Kotak Mahindra Capital. MUFG Intime India is the registrar to the issue. The issue is entirely an offer for sale of 12.64 crore shares of Rs 1 each.