One of India’s biggest and long-awaited IPOs, NSE listing is now closer to reality. After filing of DRHP by NSE, the big question before the investors is whether it would be better to invest in BSE shares now or wait for the IPO of NSE. Market experts believe that most of the expectations related to NSE listing have already been reflected in BSE shares. In such a situation, the way forward will depend on the actual performance of the company.
After waiting for almost a decade, the National Stock Exchange (NSE) has filed its DRHP. This seems to clear the way for India’s most talked about IPO. However, market experts are considering this not as a new trigger but as a confirmation of already existing expectations. In the ET report, Mangal Keshav Financial Chairman Paresh Bhagat says that the market was already positive about the NSE listing. The filing of DRHP has only made it clear that the listing process is moving forward. This does not change the core business of BSE or its earning capacity.
There will be no direct impact on BSE’s business model.
According to experts, NSE’s IPO is completely offer-for-sale (OFS) based. This means that new money will not come to the company, rather existing investors will sell their shares. The interesting thing is that NSE shares will also be listed on BSE. Paresh Bhagat says that this will only give investors an opportunity to make a direct comparison between the two exchanges. Till now the valuation of NSE was done only on the basis of estimates, but after listing it will be possible to compare the valuation, growth and profits of both the companies.
The effect of NSE listing is already visible in BSE.
In the last one year, there has been a tremendous rise in BSE shares. Analysts believe that a major reason for this rise has been the possible listing of NSE. According to Saurav Choudhary, MD, Raghunath Capital, most of the benefits from NSE IPO have already been absorbed in BSE shares. Investors have given better valuation to BSE based on its strong earnings, increasing share in derivatives business and expectations of NSE listing. He believes that now the direction of BSE shares will not be decided by any special event, but by the company’s earnings and business performance.
What should investors do?
Ishan Tanna, Senior Associate, Ashika Capital, says that the investment decision should not be based only on waiting for NSE IPO or not. BSE is part of India’s rapidly growing capital markets ecosystem and is benefiting from growing retail participation, mutual fund investments and market activity.
However, after the listing of NSE, the comparison between the two exchanges will be more in-depth. In such a situation, it will be necessary for BSE to continue its strong performance to justify its valuation. Experts believe that if BSE expands its derivatives business and maintains strong growth in profits, there will be potential for investors to make money in the future. At the same time, by just waiting for NSE IPO, investors may miss out on the current opportunities in the sector.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
Leave a Reply