The National Stock Exchange of India (NSE) has slashed its IPO valuation by approximately 15%, reducing its target to roughly $47 billion from an initial $55 billion. This decision came after global investors, during meetings in Hong Kong, London, and New York, expressed concerns about the bourse's future growth prospects. A key factor in these concerns was the impact of regulatory curbs on NSE's booming derivatives business, which investors viewed as a significant impediment to continued expansion.
Despite the reduced valuation, the NSE's shares are still expected to be more expensive than those of the top 10 global exchanges. The IPO is an offer-for-sale by existing shareholders, meaning no fresh capital is being raised by the exchange itself. The share price is likely to be set in a band of 1,700-1,785 rupees per share, which is below an earlier marketed range of 2,000-2,100 rupees. This revised pricing is also about 13% below the 2,045 rupees at which unlisted NSE shares last traded on September 8.
The overall IPO size has also been affected, with some top investors, including National Insurance Co. of India, General Insurance Company, and MS Strategic (Mauritius), reducing the number of shares they plan to sell. This reduction in the stake offered, from an originally planned 6% to about 5.5% of the total equity capital, means the IPO will likely raise about 24,300 crore rupees ($2.37 billion). This figure falls short of the 27,900 crore rupees raised by Hyundai Motor India Ltd. in 2024, preventing NSE from becoming India's biggest-ever listing. The lower IPO size and valuation reflect broader market sentiment, as Indian stocks have underperformed, with the Nifty 50 index down 10% this year compared to a 25% gain in the MSCI Emerging Markets Index. Analysts note that investors are becoming more selective and require stronger valuation arguments for new listings in India.
