IFCI shares have surged over 16% in the past two days as the National Stock Exchange (NSE) inches closer to its much-anticipated initial public offering (IPO). The Securities and Exchange Board of India (SEBI) is reportedly nearing the approval of the draft red herring prospectus (DRHP) filed by NSE, which could significantly impact IFCI due to its indirect exposure to the exchange through Stock Holding Corporation of India (SHCIL).
IFCI holds a controlling stake in SHCIL, which owns over 4% of NSE. This connection makes IFCI's stock particularly sensitive to developments surrounding NSE's IPO. The IPO will consist entirely of secondary share sales, with existing shareholders planning to sell up to 148.9 million shares, representing about 6% of the company.
The selling shareholders in the offer for sale include prominent names such as State Bank of India, MS Strategic (Mauritius) Limited, and Canada Pension Plan Investment Board, among others. The exchange is seeking a valuation of up to Rs 5.26 lakh crore ($55 billion) in its planned IPO, according to a Bloomberg report last month.
SEBI has recently settled all pending matters with NSE, including the co-location and dark fibre cases, for Rs 1,491.2 crore. This settlement removes the last major regulatory hurdle for India's largest stock exchange, which has faced repeated delays in its IPO due to legal and regulatory issues.
NSE's financial performance has shown growth in revenue from operations, rising to Rs 16,601 crore in FY26 from Rs 14,780 crore in FY24. However, its profit after tax declined 15% year-on-year from Rs 12,188 crore in FY25 to Rs 10,302 crore in FY26, partly due to SEBI's tighter regulations on equity derivatives trading.
The IPO, entirely an offer-for-sale of up to 14.89 crore equity shares, is expected to list NSE's shares on BSE, similar to how BSE's shares are listed on NSE. Despite the rich valuations, Dolat Capital Market Pvt. has issued a bearish outlook on NSE, citing potential declines in trading volumes and market share due to tighter regulations.
Background
The NSE IPO has been eagerly awaited by market participants, as it represents a significant event in the Indian stock market landscape. The exchange's journey to the IPO has been fraught with regulatory challenges, particularly concerning the co-location and dark fibre cases. The resolution of these issues marks a crucial step forward, potentially paving the way for other financial entities to explore public listings.
As the NSE IPO draws closer, market participants will be keenly watching for SEBI's final approval and the subsequent impact on related stocks like IFCI. Investors are advised to stay informed about further developments in this high-profile IPO.
