India's NSE IPO draws over US$10 billion, traders eye modest listing pop

MUMBAI: The National Stock Exchange of India's IPO garnered more than US$10 billion by the final bidding day on September 21, as investors seek to capitalize on a surge in Asian public listings. The US$2.3 billion offering, India's largest after Hyundai Motor India's $3.3 billion sale, received bids for 505.81 million shares, five and a half times the 88.64 million shares available.

NSE shares are expected to begin trading on Thursday, concluding a decade-long journey for India's leading stock exchange to join public markets. This IPO arrives as India's primary market gains momentum, with Jio Platforms, owned by billionaire Mukesh Ambani, set to list later this year, potentially becoming the country's biggest stock offering.

Qualified institutional buyers drove demand, bidding for 12.68 times the shares allocated to them, while non-institutional and retail investors subscribed 6.55 times and 1.39 times, respectively. The strong institutional interest suggests investors are willing to overlook a recent slowdown in derivatives and bet on the long-term growth of India's capital market, according to analysts.

India's largest bourse controls 93% of the cash market and nearly 75% of options trading. Trading on the exchange rose 40% over two years to 129.09 million investors as of March end. However, regulatory changes, taxation, and a new closing auction have negatively impacted derivatives trading, which has declined since 2024. Despite these challenges, long-term volumes are expected to rise, and Waterfield Advisors' Vipul Bhowar predicts that NSE's non-derivatives businesses will contribute significantly to earnings.

The premium for NSE shares in the grey market indicates a potential 2% to 5% gain during the trading debut. The IPO seeks a valuation of up to US$46 billion, which is 15% to 20% lower than the valuation requested during pre-deal roadshows, helping to limit downside risk for NSE. If the stock falls below the IPO price after listing, it should be considered a buying opportunity, Bhowar added.