The National Stock Exchange of India (NSE) is set to price its initial public offering (IPO) at ₹1,700 ($17.85) to ₹1,785 per share, which is about 15% below its earlier marketed range of ₹2,000-₹2,100. This pricing decision has sparked concerns among investors who previously bought NSE shares in the unlisted market, where prices had hovered between ₹1,950-₹2,200, potentially leading to losses for them.
The lower valuation comes after global investors expressed concerns about NSE's growth prospects, particularly following regulatory curbs on its booming derivatives business. The exchange initially sought a valuation of around $55 billion, but investor feedback in meetings across Hong Kong, London, and New York led to a reduction of this target by approximately 15% to about $47 billion. Even at this revised valuation, NSE shares would still be more expensive than those of the top 10 global exchanges, trading at roughly 43 times its fiscal 2026 earnings, compared to an average of 24 times for the four largest global exchanges.
The IPO, which opens on September 17, is structured as a 100% Offer for Sale (OFS), meaning existing shareholders like State Bank of India (SBI), Canada Pension Plan Investment Board, and Temasek are selling their stakes, and NSE itself will not receive any proceeds. The total size of the OFS is expected to be around ₹22,562 crore, lower than the initially anticipated ₹30,000 crore, as some shareholders, including SBI, have decided to reduce the number of shares they are selling. For instance, SBI reduced its stake sale from 1% to about 0.7%, aiming to retain more shares in anticipation of future price appreciation.
NSE holds a dominant position in India's financial markets, with about 93% market share in cash equities, 99.79% in equity futures, and 74.71% in equity options. Despite a significant drop in derivative volumes after regulatory changes, which saw daily volumes fall by 75% from October 2024 to March 2025, NSE reported robust financials in fiscal year 2026, with revenue of ₹16,600 crore and a net income of ₹10,300 crore, maintaining a profit margin of around 62%. Options trading constituted about 60% of its total revenue, generating ₹10,000 crore.
While the lower IPO price may be beneficial for new investors by leaving room for future appreciation, it presents a challenge for those who bought unlisted shares at higher prices. However, market analysts suggest that the IPO is expected to list positively and deliver good returns over time due to NSE's strong market position and profitability, making existing shareholders' decision to hold onto more shares strategic for potential long-term gains.
