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The National Stock Exchange (NSE), the country’s top bourse, has seen its market value soar by nearly Rs 85,000 crore to Rs 3.21 trillion after declaration of a four-for-one bonus issue and dividend of Rs 90 per share.
Its shares have jumped to Rs 6,000 apiece in the unlisted market from Rs 4,500 prior to its results last week.
Industry experts said that the interest from retail and high-networth investors (HNIs) in the stock has grown on the account of bonus issue. With the bonus issuance, the stock will trade in the sub Rs 1,200-1,500 range, it will appear cheaper and
also boost liquidity, they said.
The bonus issue announcement by NSE board, many believe, could be a precursor to its initial public offering (IPO). While the exchange has been eyeing to go public for over five years now, its plea before the regulator hasn’t yielded much result. As a reason, the price of share was range-bound till December 2023 and gained momentum only this year.
After its earnings, the exchange said that it did not have any update from the regulator on the impending IPO.
“The stage-1 approval when someone buys or sells NSE shares comes on the same day. However, as its ISIN is frozen, the share transfer process is done manually, which takes 2-3 months. The exchange and the depository are trying to expedite the process. However, there isn’t much progress on that front,” said Dinesh Gupta, director of Unlisted Zone.
The exchange’s management had affirmed last year that they were working to reduce the processing time to one week.
However, it is still a time-taking process as the regulations mandate exchanges to be held by only ‘fit & proper’ entities. According to industry players, there are two phases of approvals to buy NSE shares.
The first is KYC and the second is approval for processing the transfer of shares. In cases where the buyer bought the shares in the past, then there is no requirement for the KYC stage again.
The first stage may take up nearly two months while a fortnight or a month is taken for the second phase.
“Given the multi-fold run up in the shares of rival BSE, NSE’s valuation is now in fact attractive as the stock hasn’t moved much in the past one year or so due to regulatory issues and uncertainty around the IPO,” added Gupta.
While there are concerns around BSE gaining market share, overall option volumes continue to scale up which will keep NSE’s earnings growth robust, he said.
