The National Stock Exchange (NSE) took an important step towards launching its initial public offering (IPO) after its board approved a plan to request a no-objection certificate (NOC) from the Securities and Exchange Board of India (Sebi). This decision was made during the NSE’s annual general meeting (AGM) on Tuesday.
Suvajit Ray, the head of product and distribution at IIFL Securities, explained that applying for this NOC is a preliminary move towards the IPO. He suggested that high net-worth individuals (HNIs), family offices, and institutions might consider investing in NSE’s IPO for the long term, ranging from 5 to 10 years. However, he advised potential investors to proceed with caution and avoid getting too carried away or heavily investing in the stock.
Strong Demand for NSE Shares
Interest in NSE’s unlisted shares has been strong, with the stock trading at around ₹5,400, up from ₹3,200 in February. This rise is mainly due to limited availability and few sellers, as per market experts. After the exchange secured Sebi’s approval to increase its share capital through a 4:1 bonus share issuance, the stock’s post-bonus price is expected to range between ₹1,200 and ₹1,400 per share, according to Nirav Karkera, head of research at Fisdom.
Karkera mentioned that this expected price also accounts for an increase in demand as the share price lowers and IPO plans become clearer. He also noted that ongoing litigation related to the co-location case and uncertainty over regulatory moves on the futures and options (F&O) segment are risks that could affect pricing.
IPO Timing and Market Conditions
Suvajit Ray added that NSE’s shares are fairly valued in the unlisted market and predicted that the issue price might exceed ₹1,600 after the stock split. The IPO is set to launch amid a rise in F&O trading volumes, with Sebi taking steps to limit speculative trading. Ashishkumar Chauhan, the managing director and CEO of NSE, recently stated that Sebi’s proposed regulations on equity index derivatives could have a significant impact on trading volumes if fully implemented.
These potential regulatory changes could affect NSE’s volumes and, in turn, influence the pricing of the upcoming IPO.
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