BSE IPO gets 51% bids on Day One; price band is Rs 805-806

The retail portion of the issue was subscribed 86%

The BSE stock exchange’s Initial Public Offering (IPO) of equity garnered 51 per cent subscription on Monday, first day of the Rs 1,240-crore issue. The retail (for small investors) portion of the issue was subscribed 86 per cent. That for high net worth individuals and institutional portion was subscribed 12 and 16 per cent, respectively. The IPO will remain open till Wednesday. The offer is is entirely a secondary share sale by existing investors. BSE on Friday raised Rs 363 crore by allotting 4.6 million shares to anchor investors at Rs 806 each.

The price band for the IPO is Rs 805-806. At the top end, the bourse will be valued at Rs 4,400 crore.

Retail brokerages give thumbs-up to IPO

Retail-focused brokerages have recommended their clients to subscribe to the Rs 1,240-crore initial public offering (IPO) of BSE. Excerpts:

India Infoline: "Valuations justified"

Improvement in market share in certain products and activities have enhanced FY17 revenue (annualised figure based on H1FY17) by 16.5 per cent year over year. At the upper end of the issue price, the stock is available at a price-to-earnings (PE) ratio of 20.6 on FY17 annualised earnings. In comparison, MCX is trading at PE of 40. We believe the valuation demanded by the company is justified.

Angle Broking: "Decent growth in business"

While equity savings in India remain low, with other asset classes becoming less attractive, investors' acceptance of equity as an investment is gaining momentum. With India remaining an attractive investment destination, BSE is likely to see decent growth in business. BSE has sustained the high competition in past many years. 

Geojit BNP Paribas: "Diversified revenue mix" 

Overall financial performance remained healthy, with revenue registering a compound annual growth rate (CAGR) of seven per cent over FY13-16. We are upbeat on the stock owing to its diversified revenue mix and continuous focus on introduction of new products and services.

Nirmal Bang: "BSE trying to strike first"

Due to lag in adoption of derivatives, BSE lost its dominant position to NSE or National Stock Exchange even in the cash segment. Now BSE is trying to strike first in many of the newer products like currency derivatives, mutual funds, debt markets, and international exchange. 

IDBI Capital: "Best option in listed space"

While BSE has significantly lower market share compared to NSE or National Stock Exchange, it is currently the best option in the listed space. Further, we believe that with cash per share of Rs 512 (64 per cent of issue price) and implied price-to-earnings ratio of 35 times FY16 EPS (earnings per share) compared to 56 times for MCX, the BSE's IPO is available at reasonable valuation. 

Compiled by Pavan Burugula