India's National Stock Exchange (NSE), recognized as the world's largest derivatives exchange, launched its initial public offering (IPO) on September 17, with anchor investor bidding commencing on September 16. The $2.3 billion offering, an offer-for-sale from existing private shareholders, sought a valuation of up to $46 billion at a price band of 1,700 to 1,785 Indian rupees ($17.72 to $18.60) per share. This makes it India's second-largest IPO, following Hyundai Motor India's $3.3 billion offering, and is set to be among the country's top 10 most valuable companies by market capitalization upon listing. The shares are expected to begin trading on Thursday, September 24.
The IPO saw strong demand, particularly from qualified institutional buyers, whose portion was subscribed 12.68 times. Non-institutional and retail investor portions were subscribed 6.55 times and 1.39 times, respectively, bringing the total subscription to 5.71 times the 88.64 million shares on offer, attracting over $10 billion in bids. This robust institutional interest signals that investors are willing to overlook a recent slowdown in the derivatives segment and are betting on the long-term growth prospects of the Indian capital market. The NSE commands a significant market share, with 93% in the cash market and nearly 75% in options.
Investor caution stems from declining derivatives trading volumes, which have impacted the offer price. The exchange's extraordinary derivatives-driven growth has been slowing, raising questions about its sustainability. Regulatory changes, including larger options contract lots and rationalized weekly expiries, contributed to a 3.15% year-on-year decline in operating revenue to 16,601.31 crore rupees and a 15.47% fall in net profit to 10,302.06 crore rupees in FY26. NSE's share of the equity options market also decreased from 96.86% in FY24 to 74.71% in FY26. Despite these challenges, analysts foresee potential derivatives growth of 8-12% in FY28 and FY29.
The final valuation of $46 billion represents a 15% to 20% discount compared to earlier pre-deal roadshows. At the upper price band, NSE is priced at a Price-to-Earnings multiple of approximately 35.4 to 42.9 times FY26 earnings, which is a discount compared to its domestic peer BSE Limited (46.9 to 50.5 times). This gap exists despite NSE's higher net operating margin of 62.05% versus BSE's 47.38%. Unofficial grey market premiums, which initially indicated listing gains as high as 15.8%, moderated to between 3% and 6% by the close of bidding, influenced by the large scale of the offering, secondary market volatility, and institutional reassessments of NSE's earnings outlook following regulatory changes. Life Insurance Corporation of India, a significant shareholder, did not sell its existing stake and committed over 500 crore rupees in fresh capital through the anchor allocation.
The IPO is structured entirely as an Offer for Sale, meaning NSE itself will not receive any proceeds; the entire sum will go to the selling shareholders. The 12,64,36,650 equity shares offered represent roughly 5.11% of the exchange’s total paid-up capital. Due to SEBI regulations prohibiting an exchange from listing on its own platform, NSE shares will exclusively list on its rival, BSE Limited. This marks the culmination of a decade-long effort for India’s largest stock exchange operator to go public.
