The National Stock Exchange (NSE) is preparing to once again seek approval from the Securities and Exchange Board of India (SEBI) to move forward with its long-awaited initial public offering (IPO), according to sources familiar with the situation. The exchange’s IPO plans have been delayed due to ongoing regulatory issues, including the co-location case.
During its recent annual general meeting, shareholders discussed refiling for the no-objection certificate (NOC) with SEBI. The NSE can only proceed with filing the draft IPO documents after securing this NOC.
The NSE initially filed its draft red herring prospectus (DRHP) in 2016, but SEBI returned it in 2019, requiring the exchange to refile after resolving the co-location investigation. This matter is currently pending before the Supreme Court, with the next hearing scheduled for September 3.
In response to a recent writ petition regarding the delay of the NSE IPO, SEBI informed the Delhi High Court that the exchange has not yet submitted a new request for an NOC. NSE’s previous attempt to seek approval for the listing in June 2022 was rejected due to lapses in governance, technology, surveillance, and trading practices.
The NSE’s IPO is anticipated to be the largest in India’s history. Shares of the NSE are currently trading at ₹6,000 each in the unlisted market, nearly double their value from a year ago. At this price, the exchange’s market capitalization would reach approximately ₹3 lakh crore.
If the exchange decides to sell 10% of its equity in the IPO, the offering size could be around ₹30,000 crore. This would surpass Life Insurance Corporation’s ₹21,008 crore IPO in May 2022, which is currently the largest in India, followed by Paytm‘s ₹18,300 crore IPO in November 2021.
Some of the major shareholders in NSE include Life Insurance Corporation (LIC) with 7.2%, Stock Holding Corporation (4.44%), SBI Capital Markets (4.33%), State Bank of India (3.23%), and Temasek Holdings (5%).
For the fiscal year ending March 31, 2024, NSE reported a net profit of ₹8,306 crore, marking a 13% increase from the previous year. The exchange’s revenue grew by 25% to ₹14,780 crore compared to FY23.
Additionally, NSE received SEBI approval to increase its authorized share capital, allowing it to issue bonus shares. In May, the exchange announced a four-for-one bonus issue along with a ₹90 per share dividend. However, IIFL Securities noted that SEBI’s proposed norms to curtail heightened Futures & Options (F&O) trading could significantly impact NSE’s turnover, potentially reducing trading volumes by nearly one-third and leading to a projected 20-25% reduction in FY26 estimated earnings per share (EPS).