NSE debuted on BSE at 1800 rupees; CEO stated that India's growth will stimulate the exchange

The Initial Public Offering (IPO) of National Stock Exchange (NSE) has positioned it among India's most valuable companies and cemented its status as the country's largest exchange by market capitalization. Valued at ₹4.45 trillion at the time of listing, NSE was twice as expensive as the combined market capitalization of BSE, Multi Commodity Exchange (MCX), and Indian Energy Exchange (IEX).

The combined market value of these three exchanges amounted to ₹2.28 trillion. At 10 am, the market capitalization of BSE was valued at ₹1.31 trillion, MCX at ₹86,875 crore, and IEX at ₹9,973 crore.

On the debut day, NSE shares traded at ₹1800, which was 0.84 percent higher than the IPO price of ₹1785. According to Vinita Bolinjkar, Head of Research at Ventura, this valuation reflects NSE's dominant position in the market, high profitability, and network-based business model.

Bolinjkar noted that compared to competitors like BSE, MCX, and IEX, NSE operates a broader ecosystem of multi-active exchanges, covering stocks, derivatives, currencies, debt, clearing, indices, data services, and technology solutions, giving it an advantage.

Harshal Dasani, Business Head at INVasset, pointed out two aspects to watch on the first day of trading: the maintenance of thin retail volume and the purchase of the remaining order book by institutional investors in the secondary market.

NSE is also India's largest exchange by trading volume, accounting for 92.99 percent of the cash market turnover for the financial year 26, 99.79 percent in stock futures, and 74.71 percent in stock option premiums.

How should investors approach the exchange business?

Dasani believes that exchanges function like toll roads for activity, making them the best business model in the financial services sector while being the most cyclical. Revenue is generated by two factors: trading volumes and commissions. Volume depends on the market cycle, whereas commissions are largely determined by regulators.

Dasani suggests viewing the exchange business through three lenses. First, regulatory risks must be monitored. Changes in derivative lot sizes or trading fees can affect stocks more than quarterly earnings. He cites the example of IEX: its 85 percent market share is being re-evaluated as regulators move towards market convergence, lowering its valuation to 21 times earnings compared to nearly 50 times for competitors.

Second, one should support shareholders rather than active traders. In his view, at such a scale, growth is often achieved by capturing market share. He points out that BSE's profit grew by 62 percent in the June quarter, while NSE's profit declined by 15 percent for the financial year 26.

Third, valuations should be viewed as a bet on volumes. BSE and MCX, trading at multiples of 48–53 times earnings, require sustained activity growth to justify these ratios. The listing of NSE at around 43 times earnings for the financial year 26 could also set a benchmark for the sector.

He concludes that 'this structure suits patient capital that builds positions for a cycle, not for a quarter, and views every regulatory consultation document as a real income event.'

The Initial Public Offering (IPO) of the National Stock Exchange of India (NSE) concluded with a subscription on Monday, September 21. The offering, valued at ₹22,562 crore, received bids for 50.58 crore shares against an offer of 8.86 crore, resulting in an overall subscription of 5.71 times.

However, the overall subscription figure masks a significant divergence between the interest shown by institutional and retail investors. Qualified Institutional Buyers (QIBs) subscribed 12.68 times more than their allocated portion, while Non-Institutional Investors (NIIs) subscribed 6.55 times. Meanwhile, the retail segment received bids for 6.13 crore shares compared to 4.41 crore, leading to a relatively modest subscription of 1.39 times.

The NSE IPO became the second largest public offering in India after Hyundai Motor India's IPO, which was worth ₹27,858.75 crore in 2024. The exchange company set a price band of ₹1,700–₹1,785 per share, with a lot size of eight shares, meaning a retail investor needed a minimum of ₹14,280 at the upper end of the price band.

Reasons for Retail Investor Caution

One of the key aspects of the NSE offering was its sheer magnitude. The total amount of approximately ₹22,562 crore required a substantial volume of capital, even though the minimum retail application was ₹14,280. Furthermore, the offering was entirely an Offer for Sale (OFS), meaning the proceeds would go to existing shareholders selling their stakes, not to NSE itself as new capital.

Another factor was changing expectations regarding listing gains. Market data showed a sharp weakening of the grey market premium during the IPO period. The premium dropped to about 2 percent from a peak of around 20 percent during trading, which could reduce attractiveness for investors focused on short-term listing profits.

Santosh Mina, Head of Research at Swastika Investmart, noted that retail investors are adopting a more selective approach to the NSE IPO amidst a crowded primary market where numerous offerings compete for the same pool of capital. He stated: 'The relatively modest grey market premium also lowered expectations for immediate listing gains. At the same time, the IPO is entirely an Offer for Sale, meaning there is no inflow of new capital for NSE.' Mina added that concerns over regulatory changes affecting F&O, which remains a vital part of NSE's business, might also prompt some investors to remain cautious. He concluded: 'Given the size of the offering at ₹22,561.57 crore, the subscription requirements are also significant, making the retail response relatively restrained compared to smaller IPOs.'

Comparison of NSE Retail Demand with Other Indian Mega-IPOs

The relatively modest retail subscription of 1.39 times becomes clearer when compared to some of India's largest IPOs. According to Prime Database, Coal India showed a retail subscription of 2.21 times, and LG Electronics India showed 3.39 times. LIC, another major IPO, demonstrated a retail subscription of 1.61 times. Compared to these, the retail subscription for NSE at 1.39 times was the lowest of the three.

Nevertheless, several other large offerings also recorded relatively moderate retail demand. HDB Financial Services showed a retail subscription of 1.43 times, and Paytm showed 1.27 times. Tata Capital and Swiggy each registered a retail subscription of 1.06 times.

Prime Database data also indicates that Hyundai Motor India, the country's largest IPO worth ₹27,858.75 crore, had a retail subscription of only 0.44 times. General Insurance Corporation of India (GIC) showed 0.59 times.

Significance of Valuation and Listing Gain Expectations

Abhinav Tiwari, Senior Research Analyst at Bonanza, pointed to the difference between the NSE IPO price and its previous non-listed valuation as another factor influencing retail investor participation. He noted: 'The main concern for investors is the gap between the NSE IPO price and its previous non-listed market price. The upper price band of ₹1,785 is approximately 26 percent below the non-listed peak of ₹2,400 observed in June 2025. Additionally, pre-IPO shareholders face a six-month lock-in period post-listing, which may reduce their willingness to participate further.'

Tiwari emphasized that for new investors, a lower IPO price might not appear attractive. Instead, it might suggest that the previous non-listed valuation was too high. The grey market also shows limited enthusiasm, as the GMP fell to only 4-5 percent above the upper price band. Tiwari also drew attention to NSE's revenue trajectory, its valuation, and its exposure to the derivatives market as factors investors might consider.

He added: 'NSE's financial performance is also a cause for concern. Net profit for FY26 decreased to ₹10,302 crore from ₹12,188 crore, and EBITDA operating margin fell to 66.9 percent from 73.8 percent. At a P/E of 42 times earnings, the valuation remains high, especially considering that NSE's share in industry option premiums decreased from 78.6 percent to 68.5 percent.'

Since the IPO is entirely an Offer for Sale, and other large IPOs may enter the market, retail investors might prefer to wait, as retail demand in India is largely driven by trading aimed at listing gains, and a 3 percent cushion does not justify locking up funds. He concluded: 'Once the valuation and pricing become clearer, we may see retail participation in the long term, as the fundamentals are strong, like any other large-cap stock.'

The National Stock Exchange (NSE) has determined the price band for its highly anticipated Initial Public Offering (IPO) at ₹1700–₹1785 per share. Subscription for this offering will commence on September 17.

The total IPO size will be ₹22,569 crore and will conclude on September 21. This will make it the second-largest public offering in the country after Hyundai Motor India's offer of ₹27,870 crore in 2024.

This IPO takes place nearly a decade after NSE's plans to list were suspended due to regulatory hurdles. Now that approval has been received from Sebi, the exchange plans to debut in the market on September 24.

According to the public announcement, the auction for anchor investors will take place on September 16. The IPO will entirely consist of an Offer for Sale (OFS) of up to 12.64 crore shares among existing shareholders, which is less than the previously planned 14.9 crore shares.

The reduction in the OFS volume led to a decrease in the overall issue size from the initial estimate of ₹30,000 crore. At the lower end of the price band, the issue is valued at ₹21,494 crore, and at the upper end, at approximately ₹22,569 crore, which will prevent it from becoming the largest public offering in India.

The NSE IPO will surpass the Life Insurance Corporation of India's offering of ₹21,000 crore, which took place in 2022, but Hyundai Motor India retains the record for the largest public offering in the country with its ₹27,870 crore proposal.

As part of this offering, the company has reserved shares worth up to ₹70 crore for eligible employees. NSE employees will also be offered a discount of ₹170 per share.

Share allocation will include a 50% reserve for qualified institutional buyers, 15% for non-institutional investors, and 35% for retail investors.

According to the Red Herring Prospectus (RHP), existing shareholders have also reduced the volume of their stake sales. State Bank of India has reduced its proposed OFS to approximately 1.60 crore shares from 2.47 crore shares, and MS Strategic (Mauritius) Ltd has reduced its offer to 1.1 crore shares from 1.6 crore shares.

Bank of Baroda, Stock Holding Corporation of India Ltd, and General Insurance Corporation of India have also reduced the volume of shares offered for sale, while SBI Capital Markets Ltd is a new selling shareholder in the RHP.

Since the offering is entirely an OFS, the proceeds from the share sale will go to the selling shareholders, not to NSE itself.

This public offering marks a significant milestone for NSE after the market regulator Sebi granted the exchange permission to conduct the offering last week. Listing plans had been frozen for almost ten years due to regulatory issues, including a dispute over co-listing.

The NSE offering will compete with the Jio Platforms offer, a digital services division of Reliance Industries conglomerate led by billionaire Mukesh Ambani. The Jio offer is valued at ₹37,700 crore, although its timeline has not yet been announced.