
Shares of National Stock Exchange of India (NSE) have surged nearly 60 per cent in the last two weeks as the stock is currently being sold at Rs 2,400 in the unlisted market. The stock was available at Rs 1,500 apiece two weeks ago. The rising retail interest and the ongoing buzz around its IPO is pushing the stock price higher.
With retail investor count crossing 1 lakh mark, highest for any unlisted company, there is a sense of 'fear of missing out' or 'FOMO' among the investors f they still have a chance to buy NSE shares or it has become a missed opportunity after this sharp run-up in the pre-IPO market.
NSE is attractively valued, said marketmen tracking the unlisted market. Simranjeet Singh Bhatia, Senior Equity Research Analyst at Almondz Global, said that NSE's current valuation is attractively valued in the unlisted market. With strong earnings growth, and a low price-to-earnings (P/E) ratio
"NSE is currently trading at P/E of 70, while its competitor BSE trading at PE of 83 with NSE revenue grew at a CAGR of 33 per cent from FY22-FY25 to Rs 19,177 crore, while its net profit grew at a CAGR of 36 per cent from FY22-FY25 to Rs 12,188 crore" he added. NSE also has a strong dividend payout history.
NSE reported a 6.55 per cent year-on-year (YoY) jump in its net profit to Rs 2,650.11 crore, while its consolidated total income came in Rs 4,397 crore. For the entire financial year 2024-25, NSE clocked a 47 per cent jump in its net profit at Rs 12,187.94 crore, with a 16.7 per cent YoY rise in total revenue to Rs 19,176.83 crore. It also announced a dividend of Rs 35 apiece.
NSE is available at a healthy discount to its listed peer, reinforcing expectations of potential listing gains when the IPO materializes, said Prashanth Tapse, Senior VP of Research at Mehta Equities. While the outlook appears promising, retail investors should remain be of the inherent risks associated with investing in unlisted securities, he said.
"Assuming the resolution of all outstanding regulatory and compliance issues — currently under discussion with SEBI — NSE appears well-positioned to move forward with its long-delayed IPO. If the No Objection Certificate (NOC) is granted and listing progresses as anticipated, the price of NSE shares in the unlisted market could see further upside from current levels," Tapse adds.
At the latest stock price of Rs 2,400, NSE commands a total market capitalization of close to Rs 5.9 lakh crore. This makes it the fifth largest stock exchange in the world in terms of total mcap after New York Stock Exchange, Nasdaq, Shanghai Stock Exchange and Tokyo Stock Exchange. This mcap places it among the top-10 most valued companies in India.
NSE is a cash generating machine and is one the largest exchanges operating in India, said Avinash Gorakshakar Head of Research at Profitmart Securities. "We believe that NSE is expected to do very well as capital markets penetration in India is small and has significant headroom to grow strongly in the next 5 years ahead," he said.
NSE is ranked the biggest derivatives exchange and second largest in equities by number of trades worldwide. NSE held 99.8 per cent market share in equity futures, 94.6 per cent in the cash segment, 93.9 per cent in currency derivatives, and 81.2 per cent in equity options as of Q4FY25.
Hitesh Dharawat from Mumbai-based Dharawat Securities said that IPO buzz has triggered the rampant movement on the counter. The exchange has delivered healthy gains to the unlisted market investors, which makes us a bit cautious. "Any clarity on the IPO shall be the next big trigger for the stock," he said.