NSE lists at muted premium

NSE made a muted but positive debut on the BSE, listing at Rs. 1,800 against its issue price of Rs. 1,785, a premium of just 0.84%. It later moved higher to Rs. 1,859, up 3.28% from the listing/reference price and 4.15% over the issue price. Trading activity was heavy, with 349.41 lakh shares traded and turnover of Rs. 6,431.90 crore, while market cap stood at Rs. 4.60 lakh crore.

Trigger

• NSE listed on the BSE today after its Rs. 22,569 crore IPO.
• The IPO price was fixed at Rs. 1,785 per share.
• The issue was entirely an OFS, so NSE does not receive fresh funds from the IPO.
• IPO was subscribed around 5.7 times, led by QIB demand of 12.68 times.
• Listing was muted, broadly in line with our cautious view that the issue was “Not So Exciting”.
• SPTulsian’s IPO note had also said NSE was unlikely to deliver a listing pop, and did not recommend the IPO.

The listing has broadly played out the way our IPO Analysis had said. NSE is an exceptional market infrastructure company, but the IPO was very large, fully priced and entirely an OFS. That meant there was no fresh capital coming into the company, and the listing gain was never likely to be explosive. NSE listed at just 0.84% premium, before moving up 4.15% over the issue price in early trade.

The subscription numbers also explain the subdued listing. QIB demand was strong at 12.68 times, but retail was only around 1.35–1.39 times and overall subscription was just about 5.7 times. For a high-profile mega IPO, that is respectable but not euphoric. The muted debut shows that investors were not willing to chase the stock blindly at any valuation.