This comment has been widely interpreted by investors as a turning point in a listing process that has dragged on for nearly a decade. According to a Reuters report, NSE plans to file its draft red herring prospectus by the end of March and is already in talks with investment bankers and law firms to finalise documentation and gauge investor appetite. If this timeline holds, the IPO could become one of the largest ever in India’s capital markets.
The excitement has pushed activity in unlisted NSE shares, where prices are often driven as much by sentiment as by fundamentals. Platforms that facilitate trading in unlisted shares currently peg NSE’s overall valuation at around Rs 5 lakh crore with a price of Rs 2,095, though the exchange itself has not disclosed how much equity it plans to float or at what valuation.
Tejas, VP-Marketplace at Qapita, says investor reaction to the recent regulatory signal was expected. “NSE’s IPO has been in the making for a few years now. Investors have reacted positively to the news, and we are seeing increased buyer interest that has resulted in unlisted trading prices moving higher by about 10% from the pre-announcement date,” he said.
NSE has an unusually large shareholder base for an unlisted company. With around 1,77,807 shareholders, it is India’s largest unlisted company by number of investors.
According to Reuters, lawyers drafting the IPO papers are working on mechanisms to ensure a fair exit for this diverse group, with priority likely to be given to banks and foreign institutions that have held shares for a long time. This could limit immediate liquidity for some unlisted shareholders post-listing.
For many retail and high-net-worth investors, the key question is whether to buy NSE shares in the unlisted market at current valuations or wait for the IPO, where pricing may be clearer but allocation remains uncertain.NSE is India’s largest stock exchange and the world’s most active derivatives bourse by number of contracts traded. Along with BSE, it operates a near-duopoly in India’s market infrastructure, a space marked by very high entry barriers due to technology requirements, regulatory oversight and the need for deep liquidity. This strategic positioning is a big part of the long-term bull case for the exchange.
Tejas said the NSE business model remains structurally attractive. According to him, the exchange sits at the heart of India’s capital markets and is likely to benefit from rising equity participation and long-term wealth creation in the economy. For patient investors, early participation through unlisted shares can appear appealing, especially for those who do not want to rely on IPO allotment luck.
However, not all market participants are convinced that chasing the stock at current levels is a good idea.
Divam Sharma, co-founder of Green Portfolio, says demand has clearly picked up in the unlisted market, but valuations are beginning to look stretched. “The buzz has increased the demand for NSE shares in the unlisted market over the last few days. We have also seen prices moving up by around 15%,” he said. “We would suggest that investors should not go aggressive and buy NSE shares at these valuations. The IPO should offer a better pricing as market sentiments are also weak.”
There is some merit to this line of argument. NSE’s financial performance has come under pressure in recent quarters, largely due to regulatory actions that have impacted its most profitable segment. In November 2024, Sebi clamped down on equity derivatives by banning multiple weekly contracts, a move aimed at curbing excessive speculation. This led to a sharp drop in trading volumes, directly hitting exchange-level revenues.
NSE’s consolidated profit after tax fell 33% in the September quarter, while consolidated revenue from operations declined by 18% compared with the same period last year. These numbers underline the fact that while NSE has a strong long-term franchise, its earnings are not immune to regulatory changes.
For investors comparing options, it is also worth looking at the listed peer BSE. BSE shares currently trade at Rs 2,767 apiece, reflecting strong re-rating over the past year as cash market volumes improved. Some analysts believe NSE could command a premium to BSE given its dominant position in derivatives, but others argue that regulatory risks justify a more conservative valuation.
So what should investors do? Buying NSE shares in the unlisted market offers early exposure and avoids IPO allocation uncertainty, but comes with higher price opacity, limited liquidity and the risk of buying into peak optimism. Waiting for the IPO may mean missing some upside if pricing is aggressive, but it also provides clearer disclosures, regulated pricing and better exit flexibility.
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Analysts broadly agree on one point. NSE remains a high-quality asset with strong long-term relevance to India’s financial system. The debate is less about whether to own it and more about when and at what price. For conservative investors, waiting for the IPO and evaluating valuations against financials may be the safer route. For those with a long-term horizon and higher risk appetite, staggered exposure rather than aggressive buying at current unlisted prices could help manage risk.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)