NSE IPO Date and Unlisted Share Price: Key Legal Resolutions Signal a Possible Public Listing Soon

The National Stock Exchange (NSE) is reportedly closer to overcoming its legal hurdles and preparing for an Initial Public Offering (IPO). According to Nuvama Institutional Equities, recent resolutions to several significant legal challenges, including co-location issues, corporate governance, and trading system violations, have positioned the exchange for a potential public listing.

Legal Challenges Behind NSE’s IPO Plans

Over the years, NSE has faced a series of legal issues, including those related to the co-location case, dark fibre, corporate governance, and conflicts of interest. However, a recent report from Nuvama highlighted that the Securities and Exchange Board of India (SEBI) had cleared the exchange in several of these matters. In particular, SEBI recently disposed of a show cause notice related to the co-location case against NSE and its former executives due to insufficient evidence. Additionally, the Securities Appellate Tribunal (SAT) dismissed appeals regarding corporate governance and conflict of interest concerns in July.

NSE also settled SEBI’s probe into violations of its Trading Access Point (TAP) system by paying a hefty fine of Rs 6.43 billion in September 2024. It also resolved its interoperability non-compliance issues by paying Rs 271.3 million in November 2023. With these significant legal matters behind it, Nuvama believes NSE is now “arguably closer” to going public.

NSE Unlisted Share Price

Currently, the unlisted shares of the NSE are trading at Rs 1,800 per share, according to Nuvama’s January 13 report. This high valuation underscores the exchange’s dominance and growth prospects in India’s financial market.

NSE’s Market Share and Growth Prospects

Nuvama’s report also noted that India’s equity markets continue to show robust growth potential. Despite a lower market cap-to-GDP ratio (125%) and turnover velocity (45%) compared to global peers, India’s GDP growth and increasing retail participation are expected to drive future growth in the financial markets. NSE commands a dominant position with a 93% market share in cash equities, 99% in equity index futures, and 88% in equity index options premium. This hard-to-catch-up lead makes NSE a strong contender for future growth, further fueling speculation of a potential IPO.

Financial Performance of NSE

Nuvama highlighted the impressive financial performance of NSE. For the fiscal year 2024, the exchange’s revenue is 10.6 times that of the Bombay Stock Exchange (BSE). Transaction charges, which account for around 82% of its revenue, have been the key driver of this growth. NSE’s revenue has grown at a 43.3% compound annual growth rate (CAGR) from FY20 to FY24, significantly outperforming BSE’s 32.5% CAGR in the same period.

The exchange has also seen a marked improvement in its operating margins. Despite a rise in regulatory charges, NSE’s operating leverage has increased its EBITDA margin from 62.8% in FY20 to 71.5% in FY24. Additionally, the exchange reported a 46.9% CAGR in adjusted profit after tax (APAT) over the same period, with a return on equity (RoE) of 38.5% in FY24.

Key Risks for NSE

While NSE shows strong financial and operational metrics, Nuvama cautioned that several risks could impact its future performance. These include:

• Regulatory Risks: Changes in regulations or adverse regulatory actions could significantly impact NSE’s business, resulting in earnings volatility.
• Macroeconomic Risks: A large-scale slowdown in the economy could dampen capital market sentiment, potentially hurting trading volumes and revenues.
• Technological Risks: Failures in technological infrastructure or security breaches could result in reputational damage and regulatory penalties.
• Competition: The launch and success of new exchanges in India could pose competitive threats to NSE’s dominant market position.
• Interest Rate Risks: NSE’s operating investments are exposed to fluctuations in interest rates, which could affect its financial performance.

With these challenges in mind, NSE’s potential IPO remains closely watched by investors, analysts, and market participants alike. As the exchange clears its legal hurdles and continues to demonstrate impressive growth, the market eagerly anticipates the official NSE IPO date.