Shares of IFCI rallied 8% to hit a fresh 52-week high while those of LIC, SBI and other companies jumped up to 2% on Wednesday amid rising expectations around the National Stock Exchange (NSE) filing its draft IPO papers with market regulator SEBI this week.
IFCI shares jumped nearly 8% to trade at Rs 95.8 apiece on NSE, before paring some gains. The rally was driven by the fact that IFCI owns a 52.86% stake in Stock Holding Corporation of India (SHCIL), which in turn, holds 4.4% of NSE as of the December quarter. Through its controlling interest in SHCIL, IFCI enjoys indirect exposure to NSE, making its stock particularly sensitive to developments related to the exchange’s IPO. The stock has soared more than 51% in just one month.
SBI shares gained 1%, while those of LIC, New India Assurance Company and Bank of Baroda rose around 2% each. Each of these companies hold some stake in NSE, and the buzz around IPO is likely boosting the stocks
NSE to file IPO papers by Friday?
The National Stock Exchange is likely to file its draft red herring prospectus (DRHP) for its maiden public issue by Friday, a senior investment banker familiar with the matter told The Economic Times. "NSE will file its IPO papers by Friday. It could come anytime, and hopefully that would get the sentiments in the primary market going," the banker told ETMarkets.
Also read: NSE listing moves closer, likely to file IPO DRHP by Friday, says source
A report by CNBC-TV18 meanwhile claimed that NSE is likely to file the draft IPO papers today. It added that the Life Insurance Corporation of India (LIC) is unlikely to sell any stake via the OFS. People familiar with the matter further told the business news channel that the IPO valuation is set to be higher than Rs 5 lakh crore, and the exchange is planning to list by November this year, between Navratri and Diwali.
The Economic Times couldn’t independently verify the report.
The proposed public issue is expected to rank among the biggest IPOs in India's capital market history. The listing would provide a liquidity event for several long-term institutional investors while marking a major milestone for the country's leading stock exchange.
Earlier this year, SEBI granted a no-objection certificate (NOC) for NSE's much-awaited IPO, removing a key regulatory hurdle that had delayed the process for years. The development is particularly significant for IFCI given its indirect ownership in the exchange through SHCIL.
NSE currently trades in the unlisted market at around Rs 1,950-2,050 per share, implying a valuation of nearly Rs 5 lakh crore. This would make it one of the most valuable listed financial institutions in India once the public issue is completed.
According to Nitant Darekar, Research Analyst at Bonanza, the exchange is already commanding premium valuations in the unlisted market. "NSE remains a capital-light near-monopoly. At around Rs 1,950-2,170 in the unlisted market, it trades near 45x FY26 earnings. That's rich, but below BSE at around 70x and MCX at around 80x," Darekar said, adding that the recent settlement of the long-running co-location case has removed a key overhang that had weighed on the listing process for years.
The proposed IPO is expected to raise more than Rs 20,000 crore and will comprise entirely an offer for sale (OFS). This means that NSE itself will not receive any proceeds from the issue. Instead, existing shareholders will sell a portion of their holdings and receive the sale proceeds. The exchange is expected to offload around 4-4.5% of its equity through the public issue, according to reports earlier.
Unlike most IPOs, where companies raise capital to fund expansion plans, NSE's IPO is largely intended to provide liquidity and an exit route for long-standing investors.
Also read: $6 billion double dhamaka coming! Jio and NSE likely to file for India's biggest IPOs this week
