BSE Makes Strong Market Debut, Ends Up 33%
Analysts see limited upside from current levels, advise buying stock on a fall to .₹ 950-1,000
Mumbai: Shares of Asia’s oldest bourse BSE made a strong debut on Thursday, ending at a 32.8% premium to its issue price of .₹ 806. The performance was the best listing day performance since RBL Bank, which ended up 33% on its first trading day in August 2016. BSE is the first company to raise money through an initial public offering (IPO) and to list in 2017.
The stock ended at .₹ 1,070.55 on the NSE after listing at .₹ 1,085, or 34.6% higher than the issue price. During the session, it rose as much as 49% to a high of .₹ 1,200. BSE’s traded volume was around 1.6 crore shares, making it one of the most actively traded stocks on the NSE on Thursday. Bulk deal data on the NSE shows Nomura India Investment Fund and Nomura Trust and Banking Co bought a total of 18.2 lakh shares of BSE while Small Cap World Fund picked up 16.3 lakh shares.
After the strong debut, analysts see limited upside from current levels and advised buying the stock on a fall to .₹ 950-1,000. “If someone has bought the stock in IPO, they should stay invested and those who have a two-year horizon can also buy at current levels. But at these multiples, I don’t see significant upside in the near term,” said Urmil Shah, research analyst at IDBI Capital Markets and Securities.
Analysts said the stock is trading at a
price-to-earnings ratio of 47 times on a trailing basis, while peer Multi Commodity Exchange of India is trading at 46.5 times. With BSE being the only listed stock exchange, it is likely to enjoy scarcity premium, which is likely to prevent significant downside at least till the time rival NSE gets listed, analysts said. Rohan Admane, research analyst at Monarch Networth Capital, said short- term traders can book profits and buy again on a fall to .₹ 1,000.
“In the equity trading segment, it faces competition from NSE. But in products like currency derivatives and SME, it has a first mover advantage. There is strong growth potential,” said Admane.
At the time of its .₹ 1,243-crore IPO, BSE garnered high interest from all investor categories, with the issue being subscribed 51 times. The issue saw portion reserved for qualified institutional buyers and high net-worth individuals being subscribed 49 times and 159 times, respectively. Retail investors’ category was subscribed over six times. The issue was entirely an offer for sale of 1.54 crore shares by 302 existing investors.
The upcoming IPO of its subsidiary Central Depository Services, which filed draft papers with the Securities and Exchange Board of India in December, will be a key trigger for BSE going ahead, analysts said.