Investor Interest Points to a Strong BSE Debut Today
Products like currency derivatives, international exchange to aid growth in future, say analysts
Mumbai: BSE, Asia’s oldest bourse, will become the first stock exchange to list in India on Friday. Analysts expect the bourse to make a strong debut on the NSE after its initial public offering (IPO) of ₹ 1,243 crore received subscription of 51 times, the highest for any issue in several months. The stock could list at a premium of 5-15% over the issue price of ₹ 806, said analysts. In the grey market, the stock was trading at 21% premium, or ₹ 170 a piece, to the issue price on Thursday.
“Given the market conditions and the good subscription, BSE is likely to see a good debut,” said Geetanjali Kedia, senior research analyst at advisory firm SPTulsian.com.
BSE’s IPO was open for subscription between January 23 and January 25. The IPO was entirely an offer for sale by 302 existing investors, including Singapore Exchange and Atticus Mauritius. The issue received bids for 55.20 crore shares compared to the 1.08 crore shares on offer, excluding the anchor investors portion. The issue drew strong response from all investor categories.
“It deserves a 5-10% premium over the offer price based on the reasonable valuations,” said G Chokkalingam, f o u n d e r, Equinomics Research and Advisory.
SPA Securities, in a pre-IPO note, said BSE is available at a price-toearnings ratio of 21.3 times based on estimated FY17 earnings, while the nearest comparable company Multi Commodity Exchange of India is trading at 39 times. BSE re ported a net profit of ₹ 122.5 crore for the financial year 2015-16 on revenue of ₹ 658.3 crore. In the first half of 2016-17 financial year, the company reported a profit of ₹ 104.9 crore and revenue of ₹ 383.5 crore. Though the company has lost market share to rival NSE over the last few years, analysts said products like currency derivatives and international exchange could aid BSE’s growth, going ahead. BSE is also likely to benefit from the value unlocking through listing of subsidiary Central Depository Services, in which the exchange has 50% stake, analysts said.