Shares of the National Stock Exchange (NSE), India’s biggest bourse, are among the most sought-after among unlisted companies, with the average monthly turnover topping $300 million in off-market trading, wealth managers and investment bankers said.
From family offices of ultra-high net worth individuals to private equity funds, investors want a share of NSE’s growing market share pie. According to these people, the current share price of the exchange hovers around ₹3,200 per share in the unlisted market, up from ₹2,750 a share a year back, according to analysts and investment bankers, owing to low supply and high demand.
PE funds that invested in the stock even four years back at a price of ₹1,100 a share have already made 3x returns on their investments, investment bankers said. Even investors, mostly HNIs and neo rich who bought at ₹2,200 a share two years back have managed to get their capital back with the high dividend the company paid. In May, on the back of better financial performance, the company announced a dividend of ₹80 per share.
Some of the exchange’s early investors such as Saif (Elevation Capital), Citigroup, Goldman Sachs, IIFL AMC and Norwest Venture Partners, among others, have either fully or partially pared their stakes to book profits. The unlisted shares of NSE are currently being quoted in markets in the range of ₹3,175 to ₹3,300 apiece, according to a report by brokerage Prabhudas Lilladher. The face value of NSE shares is ₹1.
NSE commenced operations in 1994 and is today the largest exchange of India with more than 50 million unique investors registered on its platform. As of FY22, it has nearly 100% market share in the equity derivatives segment, while market share in equity cash segment is 93%, according to an IIFL Securities report. NSE is also the world’s largest derivative exchange (traded volumes) for the last three years. Around 200,000 real-time orders are processed per second and it has 31.2 million active clients. It has 116 million active demat accounts. NSE has 93% share in the cash market and 100% market share in equity F&O. It has 97% market share in currency options.
The bourse’s total income increased from ₹6,202.8 crore in FY21 to ₹12,765.4 crore in FY23. Its Ebitda increased from ₹4,718.6 crore in FY21 to ₹10,437.2 crore in FY23, while profit has increased from ₹3,574.2 crore in FY21 to ₹7,354.9 crore in FY23, the IIFL Securities report shows. Ebitda is earnings before interest, taxes, depreciation, and amortization. The company’s valuation in the unlisted market is ₹1.6 trillion. To be sure, there is no way of corroborating these numbers as these are private trades which are not documented officially.
According to the IIFL report, Individuals own 10.41% shares in NSE, while listed corporates own 1.41%. Unlisted corporates hold 13.67% and financial institutions/banks own 4.57%. Insurance companies have the largest share among the DIIs with 19.31% stake and venture capital fund/AIFs own 4.80%. Foreign holding is around 44.58%.
NSE stock is among the most valued unlisted stocks in India, alongside Reliance Retail ( ₹ 1.2 lakh crore, and Tata Technologies ( ₹1 lakh crore). The company is likely to come up with its initial public offering, which has been delayed due to regulatory reasons, by FY 26.
Special opportunities fund, sovereign wealth funds and bulge bracket PE funds have sold their stakes in the last 18-24 months to capitalise on the surge in share price and book profits.
“While institutional investors are cashing out to book gains, HNI investors are buying through their wealth managers in the hope that the company is likely to list in 2026 at ₹ 4500-5000 a share,” Suvajit Ray, head-products and distribution at IIFL Securities said. According to him, the average volumes in the unlisted market for NSE for the last 12 months is around $300-350 million per month, making it one of the most traded unlisted share.
“The number of shareholders in the company has gone up from mere 20-23 in 2014 to more than 4000 now,” an investment banker said citing that most BSE 500 companies too might not have so many investors.
According to a research analyst, the return on capital that BSE, a rival of NSE has given in the last 12 months (192.67%, from October 25, 2022 to date), gives us a good indicator as to why NSE continues to be in demand.
“With NSE starting its tie ups with SGX and IFSC, it is likely to be a game changer and multiply the stock manifold. And investors are betting big on this,” the analyst said.