NSE shares could gain 20-25% in the first four to six weeks after listing, according to Harsha Raghavan, Managing Partner at Convergent Finance, who expects fresh demand from institutional investors to support the stock.“I would expect that the stock will pop 20 to 25% within the first 4 to 6 weeks,” Raghavan said during CNBC-TV18’s Market Forum on the NSE IPO.
Raghavan said that while the National Stock Exchange is widely held, it does not have significant ownership among several large mutual funds and global institutional investors, which could create additional demand once the stock begins trading. The NSE has set the price band for its IPO at ₹1,700-₹1,785 per share, with the issue opening for subscription on September 17 and closing on September 21.
The lot size has been fixed at eight shares, taking the minimum retail investment at the upper end of the price band to ₹14,280. At ₹1,785 per share, the IPO is valued at around ₹22,562 crore, making it the second-largest IPO in India by issue size. The pricing implies a market capitalisation of about ₹4.41 lakh crore for NSE.
The IPO is entirely an Offer For Sale , meaning NSE itself will not receive any proceeds. As part of the offer, existing shareholders including SBI, Canada Pension Plan Investment Board, Aranda Investments, MS Strategic, New India Assurance and Bank of Baroda will sell shares.
Raghavan, who was an early investor in NSE through Goldman Sachs in 2006 and again through Fairfax India in 2016, said his investment thesis was based on the exchange’s potential to benefit from the financialisation of the Indian economy.“When you look, when you think back to the early 2000s, clearly the US had market depth.
Hong Kong, Japan, London, it wasn't very many that had market depth. Then you looked at the rest of the world and you said, Who has potential to have that same level of market depth in the future? And one name, one country did rise to the top, and that was India,” he said.
He described NSE as “the best way to play on the financialisation of an economy”. Raghavan also sees significant room for NSE to grow beyond its current scale, pointing to rising retail participation, increasing wealth, new listings and the expansion of products such as bonds and commodities.“As India's wealth goes up, they may start trading 6,000 or 8,000 rupees,” he said, adding that he does not believe NSE is close to becoming “an infrastructure company only, without growth.”The NSE IPO has reserved 35% of the offer for retail investors, 50% for qualified institutional buyers and the remaining portion for non-institutional investors.
Eligible employees will receive a discount of ₹170 per share. The shares are scheduled to be listed on the BSE on September 24, with allotment expected on September 22 and credit to demat accounts on September 23.