NSE debut disappoints: Can it deliver long-term gains? Experts weigh in

Arun Kejriwal, founder of Kejriwal Research, said that NSE delivered a lacklustre listing and certainly well below expectations.

Investors looking to play India's financialisation story may consider investing in NSE shares as it could emerge as a good "long-term" bet even as its shares debuted on a flat note on Thursday.

 

NSE share price listed at ₹1800 apiece on the BSE, up just 0.84 per cent over the offer price of ₹1,785 apiece. The listing was below expectations as the grey market signalled a 2 per cent listing pop. READ MORE 

However, soon after listing, NSE shares extended gains and were last trading at ₹1870, up nearly 4 per cent from the listing price and 4.75 per cent from the IPO price.

 

 

Arun Kejriwal, founder of Kejriwal Research, said that it's a lacklustre listing and certainly well below expectations. He believes that if the price continues to hover around this level for some time, selling pressure could intensify as most people expected it to make anything between 3-5 per cent as a listing pop.

 

"What would be most unfortunate is that one is not sure whether buying support at lower levels will come in from large institutional investors, even though the institutional portion was very well subscribed. If that fails, the share could actually slip into negative territory as the day progresses," he cautioned.

 

How to trade NSE shares?

Talking of the long term, NSE is a proxy play on the nation's GDP, because that's how stock exchanges perform, Kejriwal noted.

 

The only negative, he flagged, is the volume mix between derivatives and cash trading. "But I believe one should look at that part of the business as something akin to smoking. Everybody knows it's bad for health, but a die-hard smoker—and a die-hard trader on the bourse—can never be corrected." 

Domestic brokerage Prabhudas Lilladher initiated coverage on NSE shares on the listing day with an ‘Accumulate’ rating and a target price of ₹1950. 

 

"We expect valuation to sustain at these levels, supported by structural factors such as (1) near-dominance in key segments with high entry barriers; (2) healthy profit growth (11 per cent CAGR over FY26-FY29E); and (3) optionality from new derivative products/ colocation revenue," it said.

 

Meanwhile, Vinit Bolinjkar, head of research at Ventura, said that he sees decent upside of 10-15 per cent for NSE in the short run, with a peak price of ₹2,000.  "The long term will be good because we have seen when volumes dwindle, the market catches up." 

NSE IPO details

NSE IPO was available for bidding from September 17 to September 21.

 

Qualified institutional buyers (QIBs) drove the bulk of the demand in the NSE IPO, which was subscribed 5.71 times overall at the end of the final day of bidding on Monday. The IPO saw bids for 505.8 million shares against 88.6 million shares on offer, BSE data shows. 

 

The QIB portion was booked 12.68 times, while the non-institutional investors' (NII) segment also saw strong traction, subscribing 6.55 times their reserved quota of 18.9 million shares. 

 

Retail individual investors ended up bidding for 61.3 million shares against a reserved quota of 44.1 million shares, translating into 1.39x subscription.

 

NSE IPO was entirely an offer for sale by existing shareholders. The price band was set at ₹1700 to ₹1785 apiece, and lot size was of eight shares for retail investors.

 

With its leadership position, strong brand, technological capabilities and expanding capital-market ecosystem, NSE remains well positioned to capture the long-term growth opportunity in India’s financial markets, analysts at Ventura stated in their IPO review note. 

 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.