National Stock Exchange's Highly Anticipated IPO
The National Stock Exchange (NSE) has officially submitted its initial public offering (IPO) documents to SEBI, igniting considerable enthusiasm among stock market investors. Prior to its public debut, NSE has disclosed a market capitalization of approximately 4.75 lakh crore rupees. This announcement has also rekindled memories from 9 years ago, specifically when the Bombay Stock Exchange (BSE) launched its own IPO. Investors are now keenly assessing which of these two prominent exchanges might offer a more lucrative opportunity for future investment.
NSE's IPO Preparations
NSE recently announced that it has appointed over 20 bankers to manage its upcoming IPO, with all detailed reports having been submitted to SEBI. Both BSE and NSE function as exchanges but also seek to list themselves as companies. While BSE successfully listed in 2017, NSE is yet to go public. As direct competitors, both exchanges are now being rigorously compared by investors across various financial metrics.
BSE's Past IPO and Current Status
BSE's IPO in 2017 was priced between 805 and 806 rupees per share, successfully raising 1,241 crore rupees from the market prior to its listing. In contrast, the grey market price for NSE's forthcoming IPO is reportedly 2,055 rupees per share, a figure significantly higher than many stocks that have recently made their market debut. NSE's IPO will involve an Offer for Sale (OFS) of 14.89 crore shares, through which the company's shareholders will divest a 6 percent stake. These shares will have a face value of 1 rupee. Notably, SBI is also preparing to sell 2.47 crore shares as part of this IPO. While BSE's share booking commenced on January 23, 2017, with a face value of 2 rupees for its shareholders' stake, the specific date for NSE's IPO has not yet been determined.
Comparative Market Valuation
Examining the valuations of both exchanges, NSE's potential market capitalization could reach approximately 5.1 lakh crore rupees, based on its estimated price band of 2,055 rupees per share. This valuation would position NSE as the most expensive exchange in India. Currently, BSE shares trade at around 4,000 rupees, bringing its valuation to approximately 1.63 lakh crore rupees. NSE has indicated plans to issue 247.5 crore shares for its IPO, whereas BSE is trading with 40.6 crore outstanding shares.
In terms of various valuation metrics, BSE appears to be ahead of NSE. BSE boasts a Price-to-Earnings (PE) ratio of 66 times, compared to NSE's 49 times. Similarly, BSE's Price-to-Book ratio stands at 24 times, higher than NSE's 16 times. Furthermore, BSE's Price-to-Sales ratio is 34 times, surpassing NSE's 27 times.
Revenue and Profitability Growth
From a financial performance perspective, NSE's revenue grew from 8,313 crore rupees in fiscal year 2022 to 16,601 crore rupees in fiscal year 2026, demonstrating a robust Compound Annual Growth Rate (CAGR) of about 18.9 percent. However, BSE has exhibited an even more impressive performance over the same period. Its revenue soared from 743 crore rupees in 2022 to 4,834 crore rupees by 2026, marking a significant CAGR of 59.7 percent.
In profitability, BSE has also registered superior growth. NSE's Profit Before Tax (PBT) increased from 5,198 crore rupees in 2022 to 10,302 crore rupees in 2026, reflecting an annual growth of 18.7 percent. In stark contrast, BSE's PBT surged from 245 crore rupees in 2022 to 2,487 crore rupees in 2026, achieving a remarkable annual growth rate of 78.5 percent. These figures suggest that while NSE commands a larger overall scale and higher absolute profit, BSE has delivered significantly stronger growth rates in recent years.
