Can NSDL IPO fuel SBI, IDBI Bank, HDFC Bank shares as Tata Tech IPO did for Tata Motors shares?
- Upcoming IPO: According to NSDL IPO DRHP, available on the company's website, IDBI Bank has offered to offload 2,22,20,000 NSDL shares through the NSDL IPO
The upcoming IPO (initial public offering) of National Securities Depository Limited is one of the most awaited public issues in the current financial year. As we see the buzz in the Indian primary market on FY 24 regarding Tata Technologies IPO, NSDL IPO has managed to create a buzz of the same decibel. There are some similarities between these two public issues. Both IPOs are significant, and both are entirely OFS (offer for sale) in nature. Still, investors in the Indian primary market eagerly await the NSDL IPO. Some Indian stock market investors expect the same results from SBI, IDBI Bank and HDFC Bank shares witnessed in Tata Motors shares ahead of the Tata Technologies IPO launch. After buzzing the Indian primary market for nearly six to seven months, Tata Technologies IPO was launched in November 2023, and it listed on the BSE and the NSE at a robust premium on 30 November 2023. In these six to seven months, Tata Motors share price ascended from around ₹415 apiece to ₹700 apiece level, delivering around 70 per cent return to Tata Motors shareholders. One of the primary reasons for the rise in Tata Motors shares was the nature of Tata Technologies' IPO, with Tata Motors being one of the shareholders offloading its stake via Tata Technologies' IPO.
NSDL IPO DRHP
According to NSDL IPO DRHP, available on the company's website, IDBI Bank has offered to offload 2,22,20,000 NSDL shares through the NSDL IPO. Similarly, Union Bank of India has provided to offload 56,25,000 NSDL shares, and SBI and HDFC Bank have offered 4 lakh NSDL shares. As the NSDL IPO is entirely an OFS, the net proceeds of the upcoming IPO will go into the balance sheet of IDBI Bank, HDFC Bank and SBI instead of the NSDL balance sheet. So, these banks are expected to deliver substantial quarterly numbers post-NSDL IPO launch. So, a section of stock market investors might be tempted to look at shares of IDBI Bank, SBI and HDFC Bank ahead of the NSDL IPO launch.
Should you buy SBI, IDBI Bank, or HDFC Bank shares?
Speaking on the potential benefit for SBI, IDBI Bank and HDFC Bank from NSDL IPO, Seema Srivastava, Senior Equity Research Analyst at SMC Global Securities, said, "The potential benefit of the NSDL IPO for SBI, IDBI Bank, and HDFC Bank shareholders depends on their stake in NSDL. If these banks hold significant shares, similar to how Tata Motors benefited from the Tata Technologies IPO, their shareholders could directly profit from the rise in NSDL's valuation post-IPO."
According to the DRHP, IDBI Bank is the major shareholder with around 26.10%, followed by NSE with 24%, and HDFC Bank and SBI holding 8.95% and 5%, respectively. However, the DRHP only mentions an Employee Reservation portion, with no details on reservations for other shareholders.
However, some experts believe the NSDL IPO is an OFS and would benefit SBI, HDFC Bank, and IDBI Bank.
Nitin Kotiyal, Senior Research Analyst at Fynocrat Technologies, said, "The NSDL IPO will benefit HDFC Bank, SBI, Union Bank, and IDBI Bank as they offload their stakes. The proceeds will strengthen their balance sheets, helping in different ways Banks might invest in digital expansion; SBI could boost lending and capital reserves, while Union Bank and IDBI Bank may use the funds to manage bad loans and improve asset quality. The final IPO pricing will determine the exact financial benefits, and the benefit to shareholders will depend on how effectively each bank utilizes the money and overall market conditions."
"Unlike the Tata Technologies IPO, where Tata Motors directly benefited from its stake, the benefits for NSDL stakeholders may be more indirect if no shareholder reservations are included. A successful IPO could boost investor confidence in the financial sector, improving market sentiment and increasing transaction volumes, ultimately benefiting banks involved in securities and investment services," Seema Srivastava of SMC Global Securities added.
NSDL IPO detail
Depository firm National Securities Depository Ltd (NSDL) aims to launch its much-awaited ₹3,000-crore initial public offering (IPO) by next month. According to the news agency PTI, as a market infrastructure institution (MII), NSDL also needs approvals other than the existing draft red herring prospectus (DRHP).
"Our dates are expiring next month. We are rushing against time to get things done fast. We will try (to launch the IPO before that)," the senior official told PTI, replying to a specific query on the timeline for the IPO. The 12-month deadline for the DRHP filed by NSDL expires in September 2025.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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