NSE’s Mega IPO All Set to Get SEBI’s Nod

The much anticipated public offering of NSE could be instigated in the upcoming weeks since SEBI is willing to permit the bourse to re-filing its DRHP for the IPO.

According to sources, NSE is firm to roll out India’s biggest IPO after receiving the market regulator’s nod. Interestingly, the public offer is expected to seek a more than Rs. 2 lakh crores valuation.

Here are more details on this much-awaited big-ticket IPO.

All About NSE’s IPO Ploy

Two months before SEBI’s chairman Ajay Tyagi took the chair, NSE filed for its public offer with the market regulator in December 2016. Subsequently, SEBI’s chairman decided to remove its offer papers viewing NSE’s entanglement in the algo trading scam.

Later on, SEBI ordered an investigation upon this situation regarding this superior access scandal and claimed data theft at NSE’s colocation servers.

In 2019, SEBI severely charged senior NSE officers and instructed them to pay around Rs. 1,000 crores. This amount was a legally-mandated payment for failure in its trading servers.

In due course, SEBI has taken legal opinion and is all set to permit the bourse to re-file its DRHP. SEBI is allowing NSE to move forward with its public offer since the court gives no pertaining stay order regarding this matter. Additionally, officers serving the penalty are not in the bourse.

Earlier, the legal opinion stated that NSE’s IPO should not be allowed unless and until it fulfilled SEBI’s final verdict in the algo trading scandal.

On the other hand, NSE has opposed the penalty at SAT (Securities Appellate Tribunal) and has still not accepted its foul play. In February 2021, the high court of Madras ignored the stay issue on NSE’s IPO. The court believed that the writ petition was premature because SEBI cleared in court that the decision to grant permission did not arise, given that NSE did not re-apply for its IPO.

Valuation of NSE’s IPO

As of now, BSE has a total price to earnings ratio of 38. On the other hand, NSE features a price to earnings ratio of around 80-100. Viewing the towering PE of the listed holdings, NSE IPO is all set to witness whopping pricing in the higher PE grouping.

National Stock Exchange features holdings over equity derivatives and thrives around 80% EBITDA margins. In addition, it also features a 93% operating to income ratio.

Bottom Line

NSE’s IPO is one of the most anticipated ones in the past few years. With this public offer, it could become India’s one of the most profitable firms with a profit margin of 55%. In the previous year, NSE earned by selling a section of its total stake (shares) in CAMS. It was a one-time earning and NSE’s sole earning from that quarter. Hence, it is difficult to estimate the current valuation of NSE from that singular transaction.

Frequently Asked Questions

1. Who is the biggest investor in NSE?

As of March 2021, Life Insurance Corporation (LIC) is NSE’s biggest investor, with a 10.71% stake.

2. What was the growth in NSE’s operating income as of March 2021?

In March 2021, NSE’s operating income saw growth by reaching Rs. 5,625 crores.

3. How much was NSE’s net profit in 2020?

NSE’s net profit grew by 89% to reach Rs. 3,574 crores.