BSE shares tumbled more than 3% on Friday after rival stock exchange NSE announced the price band and key dates for its mega initial public offering (IPO), paving the way for its much-awaited market debut. According to reports from The Economic Times, NSE shares are expected to debut on its older peer BSE on September 24, with the issue set to open on September 17. NSE has fixed the price band for the IPO at ₹1,700-1,785 per share, entirely comprising an offer for sale (OFS) of 12.64 crore shares by existing shareholders. At the upper end of the price band, NSE IPO will be valued at ₹22,561.57 crore, making it the second-largest IPO in Indian history, after Hyundai India's market debut in 2024. Notably, NSE has reduced its offer size from 14.89 crore shares to 12.64 crore shares, leading to a significant reduction in the IPO size from the initially estimated ₹30,000 crore to ₹22,569 crore. The latest grey market premium (GMP) stands at ₹218, up ₹27 from yesterday morning's GMP of ₹191, indicating strong investor interest ahead of the public listing.
At the announced price, NSE will likely have a market capitalisation of around ₹4.20 lakh crore, down from the earlier estimated ₹5 lakh crore valuation. As reported by The Economic Times, since there is no fresh issue component in the mega IPO, none of the IPO proceeds will be received by the stock exchange as all will be directed towards the selling shareholders. At ₹1,785 per share, NSE is valued at around 42.9x trailing FY26 price-to-earnings (P/E), compared with around 54x FY26 earnings for BSE. Despite being the dominant exchange, with a market capitalisation 3.3 times that of BSE and nearly 4 times higher profit after tax (PAT), NSE is currently valued at a discount to BSE. The difference stems from NSE's market-leading scale and profitability, while BSE's growth is coming off a much smaller base. Eligible employees participating in the IPO will receive a discount of ₹170 per share.
The NSE IPO size reduction was primarily driven by changes in selling shareholders' plans, with the biggest selling shareholder State Bank of India (SBI) reducing its proposed sale from 2.47 crore shares to 1.6 crore shares. Other major participants also scaled back their offerings, including MS Strategic (Mauritius) Ltd cutting down from 1.6 crore shares to 1.1 crore shares, Bank of Baroda reducing from 1.09 crore to 76.9 lakh shares, and General Insurance Corporation of India slashing its proposed sale from 1.06 crore shares to 61.87 lakh shares. Notably, the revised documents also include SBI Capital Markets Ltd as a selling shareholder, which was not part of the list in the NSE IPO DRHP. The IPO is entirely an Offer For Sale (OFS) with existing shareholders including SBI, Canada Pension Plan Investment Board, Aranda Investments, MS Strategic, New India Assurance and Bank of Baroda selling shares.
According to a video analysis shared with CNBC-TV18 by Aishvarya Dadheech, founder and CIO at Fident Asset Management, assuming that even 50% of eligible shareholders actually exit on listing day, the supply figure comes up to around 2.75% of the total capital base, which will be worth ₹14,000 crore, a relatively smaller number compared to the overall market capitalisation of ₹4.20 lakh crore. The analysis reveals that only 5.48% of the pre-offer capital of NSE is freely sellable on the day of its listing, meaning the stock will continue to have a lack of free float in the market for at least the first six months. Category I and II Alternative Investment Funds (AIFs), Venture Capital Funds, and FVCIs can sell on the first day itself, provided they have already completed six months of holding the stock, while all other existing shareholders can only sell six months after the listing is complete.
Considering the size and market capitalisation that NSE commands, Fident believes there is a very high probability of the stock being fast-tracked into the FTSE indices, since it will be eligible under the index's fast-track inclusion criteria. MSCI inclusion will be gated by the free-float available at that juncture. According to Fident's analysis, once NSE enters the BSE 500 index, it will be active funds, and not passive ones that will become the major driver of incremental demand, simply because of the scale of the active AUM benchmarked to that index. Around ₹2 lakh crore worth of Mutual Fund AUM is benchmarked to the BSE 500, and out of the nearly ₹7 lakh crore PMS equity AUM, the BSE 500 accounts for around ₹3 lakh crore. A potential entry in the BSE 500 at a 2.2% weightage could draw demand worth ₹11,000 crore for NSE, as per Fident's note. NSE shares will be listing on the Bombay Stock Exchange but will find their way into various indices of the exchange only in a staggered manner, with the final Sensex 30 inclusion possible only by June 2028.
