NSE makes historic market debut at a premium of 1%, rises further on listing

On Thursday, the National Stock Exchange (NSE) made its historic market debut in India, with its shares trading at Rs 1,800 each, marking a 1% premium over its IPO price of Rs 1,785. Analysts had anticipated a 4-5% premium based on the exchange's impressive performance in the unlisted market.

At 10:51 AM, the stock was trading at Rs 1,860.10, up 3.3% from its listing price. Srinivas Injeti, Chairperson of the stock exchange, expressed his excitement during the IPO press conference, stating that NSE now belongs to the entire nation, not just its shareholders, directors, and employees.

Despite challenging market conditions, the exchange managed to launch its public issue swiftly after clearing regulatory hurdles. Its primary focus was on establishing "inherent value" rather than relying on market valuation. The stock was launched with a market capitalization of Rs 4.45 lakh crore, which is significantly higher than the Bombay Stock Exchange's (BSE) current market-cap of Rs 1.33 lakh crore.

However, day-one gains were relatively modest, and the stock's performance in the near-to-medium term will largely depend on the availability of additional shares for trading once the lock-in period for current shareholders ends. The current regulations restrict pre-IPO shareholders from selling their shares for a period between 6-18 months post-public issue to safeguard investor interests.

Interestingly, the NSE reduced its issue size as several selling shareholders opted to retain their shares due to lower-than-expected valuations and growth potential following the listing. Notably, the exchange admitted its shares into the Metropolitan Stock Exchange of India (MSEI) through the 'permitted to trade' category, allowing investors to trade the stock on the MSEI platform without a formal listing.

The IPO saw high demand from investors, with the overall issue being oversubscribed by 5.71 times. The retail portion was oversubscribed 1.39 times, while the institutional section experienced even greater demand, being oversubscribed by 12.68 times.

Post-listing, a few brokerage firms started covering the stock with a positive outlook. Prabhudas Lilladher, a prominent financial analyst, projected that NSE's EBITDA margin could recover to 76% by FY29, in line with a 11% Compound Annual Growth Rate (CAGR) expected in PAT (Profit After Tax) over the same period, despite shrinking volumes in the derivatives segment.