The National Stock Exchange (NSE) of India has reduced the size and pricing of its upcoming Initial Public Offering (IPO), a move influenced by shareholder participation. The IPO, which is entirely an offer for sale, will not bring fresh capital to the exchange. Instead, existing shareholders are selling part of their stake, with the issue size directly tied to the number of shares they tender.
The NSE had initially proposed an offer for sale of up to 14.89 crore shares, but this has been reduced to about 12.64 crore shares in the updated filing. Consequently, the IPO size is now expected to be around Rs 22,500-23,500 crore, down from the earlier estimate of about Rs 30,000 crore. This reduction reflects a decrease in the percentage of NSE's paid-up capital being offered, from nearly 6% to about 5.25%.
The pricing of the IPO has been set below the levels observed in the unlisted market, where NSE shares have traded between Rs 1900-2050 over the past year. At around 43 times FY26 earnings, the valuation remains a premium compared to most global exchanges but is more aligned with Indian peers like BSE and MCX.
“At around 43 times FY26 earnings, NSE would still be valued at a premium to most global exchanges. However, the valuation looks more reasonable when compared with listed Indian market infrastructure peers such as BSE and MCX.”
Ishan Tanna, Senior Associate, Ashika Capital
The decision to lower pricing appears strategic, aiming to leave room for upside for new investors and ensure strong demand. Large IPOs require broad institutional interest, and a balanced pricing approach can prevent weak demand or poor post-listing performance.
Around 60% of NSE's operating revenue comes from derivatives, a segment under regulatory scrutiny due to concerns about retail participation and market stability. Any regulatory changes affecting derivatives could impact trading volumes, posing a risk to NSE's revenue base.
“Lower pricing appears to be a pragmatic move: leave some upside for public-market investors rather than push for a higher valuation and risk weak demand or poor post-listing performance.”
Ishan Tanna, Senior Associate, Ashika Capital
Background
The NSE is a dominant player in India's financial markets, particularly in equity derivatives. Its decision to go public comes amid regulatory scrutiny of the derivatives market, which is crucial to its revenue.
The reduced valuation positions the IPO attractively for public-market investors, allowing them to invest in a high-quality exchange without overpaying for future growth. NSE's IPO is set to launch on September 17, with the anchor book opening on September 16, and shares likely to list in the fourth week.
