NSE Share Price Soars 45% Amid IPO Buzz and Bonus Shares! Is This the Next Big Market Move?

While there’s still no confirmation on when the National Stock Exchange (NSE) will launch its Initial Public Offering (IPO), rumors around it have boosted its share price in the last 3-4 months. The price of NSE shares in the unlisted market has jumped by 35-45% during this period.

Just a few months ago, NSE shares were trading at Rs 4,300. Now, they’ve reached about Rs 5,800 per share, showing a 35% rise, according to one analyst. However, the price has slowed down recently due to a lack of available shares for trading, despite the increasing buzz around the listing. Investors who already own shares are holding onto them, hoping for bigger gains when the company goes public.

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According to UnlistedZone, a website that tracks these prices, NSE shares are currently trading at Rs 6,200 each, marking a 45% increase.

The excitement around the NSE IPO is high, partly because NSE is a global leader in the derivatives market. Ever since the exchange approached the Securities and Exchange Board of India (Sebi) for a No-Objection Certificate (NOC) for the IPO, even other stock exchanges like BSE and MCX have seen their prices rise. BSE’s share price has surged by nearly 50% in the past month, while MCX has seen a 12% increase.

Experts say valuing unlisted companies like NSE is tricky because less information is available compared to listed firms. However, Bloomberg reported that in May this year, private equity firm ChrysCapital valued NSE at around $17-$18 billion when it made a $700 million investment to hold onto its 4% stake.

In addition to the IPO buzz, NSE’s decision to issue 4:1 bonus shares in May has also contributed to the recent price hike. The exchange set November 2 as the record date for this bonus share issue.

Regarding the possible timing of the IPO, experts believe NSE is carefully watching global factors like geopolitical tensions and economic uncertainties in the US and China before making a final decision.

Regulatory Clearance

NSE’s board is once again planning to ask Sebi for the NOC required to move forward with its IPO, according to sources. In April, NSE’s CEO Ashish Chauhan said the company was ready for the IPO but was waiting for approval from Sebi.

The IPO is expected to be worth Rs 30,000 crore if NSE decides to sell 10% of its equity. This would make it the largest IPO in India, surpassing Life Insurance Corporation’s Rs 21,008 crore issue in May 2022 and Paytm’s Rs 18,300 crore issue in November 2021.

NSE initially filed for an IPO in 2016 but had to withdraw the plan in 2019 after Sebi asked them to resolve issues related to the colocation investigation. Recently, Sebi cleared NSE and its officials of wrongdoing in that case due to insufficient evidence. Following this, NSE and its former CEO Vikram Limaye, along with eight others, settled another case involving the misuse of trading systems by paying a fine of Rs 643 crore to Sebi.

How Does the Unlisted Market Work?

The unlisted market refers to shares of companies that aren’t yet listed on the stock exchange. These shares are typically held by founders, venture capitalists, and private equity firms. Companies in this market often operate in fast-growing sectors like technology, but due to limited public information, their shares usually trade at a discount compared to listed companies.

According to Manish Bhandari, CEO of Vallum Capital Advisors, valuing these companies can be difficult due to this lack of information.

How Can You Buy Unlisted Shares?

Unlike listed shares, which can be bought by anyone with a Demat account, unlisted shares are harder to access. Transactions often take place through intermediaries or in over-the-counter (OTC) markets.

Krishna Patwari, Founder of Wealth Wisdom India, says retail investors can buy unlisted shares through private placements or off-market deals. Some platforms like WWIPL.com also help facilitate such transactions. Additionally, retail investors can sometimes buy shares directly from company employees through Employee Stock Option Plans (ESOPs).