NSE Likely to Get Clearance from SEBI for Big Ticket IPO
Nearly 5 years after the discussion of the NSE IPO began, it looks all set to see the light of day. It is reported that SEBI may finally give approval to NSE to go ahead and file for its IPO.
While the IPO size is yet to be ascertained, NSE is expected to command a valuation of more than Rs. 2 trillion. Currently, BSE and the MCX are the two exchanges that are already listed on the bourses.
The initial IPO plan of NSE was launched in the year 2016, just a couple of months before Mr. Ajay Tyagi assumed office as SEBI chairman.
However, subsequently, the data breach issue assumed serious proportions after which SEBI had asked NSE to withdraw their offer documents till the time the entire data breach issue was fully resolved. It was only in May 2019 that SEBI framed charges against senior NSE officials over the data breach.
SEBI has reportedly sought legal opinion on the subject and the opinion appears to be in favour of allowing NSE to go ahead with the IPO plans even though the case is still sub-judice. Since there is no stay order given by any court on the public issue, the legal opinion is in favour of allowing NSE to go ahead with the IPO plans.
SEBI had imposed a total penalty of Rs.1,000 crore on NSE, including disgorgement of losses caused to other traders and brokers due to the preferential treatment to a handful of brokers. The said order has been challenged by the NSE at the Securities Appellate Tribunal.
However, the reason there was no stay on the public issue was that NSE had not applied for the IPO. Now it remains to be seen, what is the response, although an approval is expected.
While the BSE was valued at a PE of 30-35 times, NSE is expected to get a much higher P/E in the range of 80-100 times considering its dominance in the futures and options space.
For the year ending Mar-21, NSE saw operating revenue grow by 60% at Rs.5,625 crore, while its net profits were up nearly 90% at Rs.3,574 crore. However, this profit figure may be misleading as a big chunk came from the sale of stake in the CAMS IPO last year.
NSE has marquee investors that includes domestic banks, institutions and global portfolio investors. Many have been waiting for the public issue for a partial exit from their holdings and monetizing part of their holdings. The actual IPO may still be some time away, the first challenge is getting the IPO approval.
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