BSE stock soars 16% to end at Rs 1,912 on NSE IPO buzz; MCX adds 5%

Market players expect NSE's valuation to be around the Rs 2 trillion mark. They feel the exchange's IPO could lead to sharp re-rating in shares of BSE and MCX

Shares of BSE and Multi Commodity Exchange of India (MCX) climbed on Thursday amid buzz that larger rival National Stock Exchange of India (NSE) is inching close to an initial public offering (IPO).

Shares of BSE, exclusively traded on the NSE, surged 16 per cent to end at Rs 1,912 apiece, while the MCX jumped about 5 per cent to Rs 1,659 apiece.

Market players expect NSE’s valuation to be around Rs 2 trillion. They feel the exchange’s IPO could lead to sharp re-rating in shares of BSE and MCX, which are currently valued at Rs 8,550 crore and Rs 8,378 crore, respectively.

Thursday’s sharp rally comes days after the Securities Appellate Tribunal (SAT) said it has reserved certain orders in the colocation matter. The orders pertain to appeals filed by the NSE, OPG Securities, and NSE’s former heads Chitra Ramkrishna and Ravi Narain.

In April 2019, the Securities and Exchange Board of India (Sebi) barred the NSE from accessing the capital markets for six months for alleged lapses at its colocation facility. The ban ended on October 30, 2019. The markets regulator also directed the exchange to disgorge Rs 625 crore along with 12 per cent interest since April 2014. Multiple appeals have been filed against Sebi’s orders before the SAT.

The pendency of the cases is seen as a major roadblock for the exchange’s IPO.

Earlier this year, the NSE had formally written to Sebi asking whether it can once again file its draft red herring prospectus (DRHP) to go public.

“NSE has requested Sebi to convey its no-objection to enable it to proceed with its IPO plan and for filing the DRHP. Response from Sebi is awaited,” the exchange said in its annual report.

In 2016, NSE had filed its DRHP for a Rs 10,000-crore IPO. However, the probe in the colocation matter derailed its listing plan. A total of 27 shareholders had planned to sell 111.4 million shares (22.5 per cent stake) in the IPO. Among the largest selling shareholders are private equity funds Tiger Global, Aranda Investments, and SAIF Partners. A clutch of domestic banks and financial institutions had also planned to sell their holdings in the IPO.