The National Stock Exchange (NSE) has filed its updated Draft Red Herring Prospectus (UDRHP) with the Securities and Exchange Board of India (SEBI), bringing its long-awaited IPO closer to its D’Street debut. The updated document, however, is not yet publicly available, so the final changes to the offer and issue structure cannot be independently confirmed at this stage.
The exchange is now expected to announce the IPO’s price band and issue size shortly, with the announcement likely this week. The IPO is an offer for sale by existing shareholders, with no fresh shares being issued by NSE. The earlier DRHP had proposed an OFS of 14.89 crore shares. The revised offer is expected to represent around 5.5% of NSE’s equity, compared with roughly 6% under the earlier plan.
We spoke to analysts earlier this week on the possible price band for the issue. Sameer Sawant, Research Analyst at Mirae Asset Sharekhan, had earlier told Financial Express that NSE could price its IPO in the Rs 1,800-2,000 per share range. As reported earlier by Financial Express, Sawant estimated an offer of around 14.89 crore shares, representing roughly 5-5.5% of equity, with the issue potentially raising Rs 24,000-25,000 crore.
The analyst’s estimate was based on NSE pricing the public issue at some discount to the prevailing unlisted-market price. NSE shares were trading at around Rs 2,000-2,050 in the unlisted market around September 9, according to reports. Unlisted-market platforms are currently showing prices close to Rs 2,000, although these are indicative and can vary between transactions.
Sawant had also put NSE’s unlisted valuation at around Rs 5 lakh crore, compared with a market capitalisation of about Rs 1.35-1.4 lakh crore for BSE. He attributed the valuation difference to NSE’s much larger share of equity derivatives and cash-market trading, along with stronger margins and return ratios.
The grey-market premium for NSE shares was reported at around Rs 255 on September 9, down from Rs 273 a day earlier. At an unlisted price of around Rs 2,000, the GMP still represents a sizeable premium over the analyst-estimated IPO price range. GMP, however, is an unofficial market indicator and does not determine the final issue price or listing price.
The gap between the unlisted price and the eventual IPO price will become easier to assess once NSE announces its price band. A price at Rs 1,800 would mean a substantially larger discount to the unlisted market than a price near Rs 2,000.
NSE is expected to complete the IPO process in September, with reports pointing to a listing before September 25. Financial Express has reported that the exchange could come to the market around September 18, while the latest reports suggest the final schedule is still being worked out.
For now, the key numbers remain subject to the formal IPO announcement. The UDRHP has been filed, but the document is not yet publicly available. The price band, final issue size and offer structure should provide the next set of confirmed details, with the market currently working with analyst estimates of Rs 1,800-2,000 a share, an unlisted price around Rs 2,000 and a GMP of roughly Rs 255.