With the IPO rush on in full steam on Dalal Street, investors are keenly waiting for the primary market issue of National Stock Exchange (NSE), India’s largest stock exchange. The bourse has various feats and a near-monopoly status to boast of.
Dealers of the unlisted market are extremely bullish on the country’s largest stock exchange. They swear by the sound fundamentals and growth prospects of NSE, which has been eyeing a listing for some time now. Unlisted shares of NSE are trading at Rs 1,750-1,800 apiece, giving the bourse a valuation of Rs 90,000-1,00,000 crore.
"If insurance and mutual funds are low-penetrated in the country, equity investment is at a nascent stage. There is almost no downside risk to it. This paves the way for heavy upside for equity as an asset class,” says Sandip Ginodia, CEO of unlisted market player Altius Investech.
"Many segments of the derivative market, such as equities, commodities, currency and interest rates are yet to blossom." he pointed out. "With a near-monopoly status and lowest charges, NSE has the potential to gain substantially from here on. It can be the biggest story of Indian stock market in the next few decades.”
Incorporated in 1992, NSE was elevated to the status of stock exchange by Sebi in 1994 and commenced operation in the same year. NSE owns a number of subsidiaries including NSE Clearing, NSE Investments, NSEIT, NSEIT (US), NSDL, NSE Indices, NSE Data & Analytics and a few more.
Life Insurance Corporation of India (LIC) is the largest shareholder of NSE with a 12.51 per cent stake. Other key stakeholding entities include SBI (4.42 per cent), Stock Holding Corporation of India (4.44 per cent), Aranda Investment (5 per cent) and SBI Capital Markets (4.33 per cent).
In FY2019-20, NSE clocked Rs 1,885 crore PAT on a Rs 3,896 crore revenue, with a net profit margin (NPM) of 48.38 per cent. Addition of the newly opened demat accounts signals a significant surge in performance. In H1 of FY21, NSE managed Rs 1,383 crore PAT on a Rs 2,384 crore revenue and with a NPM of 58.01 per cent.
Can you simply purchase some share of NSE off-market? The answer is a big NO. Owing a slice of India's largest stock exchange can a time-consuming task with a lot of paperwork required. Even deep pockets cannot guarantee the stock in your portfolio.
Dinesh Gupta, Co-founder, UnlistedZone, said deals in the NSE scrip are strenuous to crack despite big bucks, thanks to regulatory restrictions. “Only paper work might cost Rs 10,000-15,000. If the norms are relaxed, the stock can see some immediate upside,” he said.
The number of new investor registrations in India witnessed a substantial growth in 2020, with 70 lakh new registrations, being the highest in a calendar year and 2.3 times the number of registrations that took place in 2019.
NSE's capital market segment’s average daily turnover grew 57 per cent last year. Also, transaction volumes through mobile and internet-based platforms surged, accounting for 35 per cent of total cash market turnover.
According to the Futures Industry Association (FIA), NSE emerged the world’s largest derivatives exchange for the second consecutive year in 2020 in terms of number of contracts traded. The bourse has been ranked fourth in the world in terms of the number of cash trades by the World Federation of Exchanges (WFE) for Calendar 2020.
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