BSE makes a strong debut, settles 33% higher over issue price

The stock hit high of Rs 1,200, up 49% against its issue price of Rs 806 within minutes of listing

Shares of Bombay Stock Exchange (BSE) made a strong debut on Friday, with the scrip listing at Rs 1,085, a 35% premium over the issue price of Rs 806 on the National Stock Exchange (NSE).

The stock hit a high of Rs 1,200, up 49% against its issue price within minutes of its listing. It closed the day 33% higher at Rs 1,070.

A K Prabhakar, head of research at IDBI Capital Markets expects the stock to move even higher from the current levels despite its high valuation. 

"Although the stock is bit expensive at the current levels with it trading at 28x trailing price-to-earnings (PE). Going ahead, more demand is expected as the allotment has not been up-to-the-mark. I believe another 20% upside is possible in the short-to-medium term. However, from a longer term perspective, it can even double from the current levels given its unique business model. My advice is to not sell this stock if you already hold it, and add more whenever the stock corrects by 10-15%," said A K Prabhakar, head of research at IDBI Capital Markets.

G Chokkalingam, Founder & Managing Director at Equinomics Research & Advisory, however, does not see much upside on the stock taking into account BSE’s fundamentals. 

“The stock is fairly priced, but the surge is beyond expectations valuation-wise. I believe long-term investors can stay, but short to medium-term investors should book profits,” he said.

Huge demand

The country’s first Initial Public Offering (IPO) of equity from a stock exchange has generated big demand across categories of investors.

BSE Ltd’s Rs 1,240-crore issue saw 51 times more demand than the shares on offer. The institutional investor portion was subscribed 49 times, the high net worth individual portion nearly 159 times and the retail (small) investor portion by 6.5 times, the exchange data shows.

The price band was fixed at Rs 805-806. BSE’s initial share sale was also the first this year after 26 companies together garnered Rs 26,000 crore through IPOs in 2016.

The bourse is the world’s largest exchange by number of listed companies. Shares of nearly 3,000 companies trade on BSE, which was earlier known as the Bombay Stock Exchange. It is the world’s 10th largest exchange by market capitalization. The m-cap of BSE-listed companies stands at Rs 116 lakh crore.