IFCI Shares Surge on NSE IPO Optimism as India’s Long-Awaited Exchange Listing Nears

Shares of IFCI Ltd surged as much as 6.35% to Rs 102 on the National Stock Exchange on Friday, adding to a sharp recent rally as market optimism built around the impending initial public offering of NSE, according to a report by ETMarkets.com. The stock has gained nearly 35% over the past month.

The rally underscores IFCI’s indirect exposure to the exchange. The state-owned financial services company owns more than 50% of Stock Holding Corporation of India (SHCIL), which in turn holds over 4% of NSE, ETMarkets reported. That link makes IFCI shares particularly sensitive to developments surrounding NSE’s proposed listing.

### NSE IPO Moves Closer

NSE received regulatory approval for its IPO from the Securities and Exchange Board of India on Friday, clearing a key hurdle that had stalled the listing since 2016, according to a report by Reuters published in The Business Times. NSE had filed its draft red herring prospectus with SEBI on June 17, reviving a plan held up by regulatory investigations into co-location and dark-fibre facilities, among other issues.

The exchange is targeting a listing in the week starting September 21, three sources familiar with the matter told Reuters. Book-building is expected to begin on September 11, with the price band likely announced on September 15, the sources said. NDTV Profit, citing sources, reported that NSE is targeting September 11 for the price band announcement and looking to list in the third week of September.

NSE’s IPO could rank among India’s biggest-ever, alongside billionaire Mukesh Ambani’s Jio, Reuters reported. The exchange has been valued at about US$55 billion in the unlisted market, according to Reuters estimates. In informal meetings, large prospective investors including Indian mutual funds indicated they would be comfortable buying shares at around 1,800 rupees apiece, the sources said, adding that at that price NSE would be valued at US$47 billion.

NDTV Profit reported the IPO size at Rs 30,000 crore. The offering will be entirely an offer for sale by existing shareholders, with the exchange itself receiving none of the proceeds.

The IPO story gained fresh momentum after SEBI Chairman Tuhin Kanta Pandey said the regulator was close to approving the draft prospectus filed by NSE, ETMarkets reported. A prior Bloomberg report said NSE is seeking a valuation of up to Rs 5.26 lakh crore ($55 billion) for the IPO.

### Market Reactions and Risks

“Post-listing NSE will be top 10 among India’s largest companies in terms of market cap, which will garner huge interest from the market,” Deven Choksey, managing director of fund and wealth manager DRChoksey FinServ, told Reuters. “At an expected price-to-earnings valuation of around 35 times, the IPO would provide investors with headroom (for gains) after listing.”

However, the IPO arrives as India’s market regains momentum after a slowdown earlier this year. Arun Kejriwal, founder of Kejriwal Research and Investment Services, told Reuters he was unsure whether the NSE listing would ease or intensify competition for investor attention. “I’m not sure whether NSE hitting the market at such a time will add to the pressure or reduce the pressure.”

NSE’s derivatives trading volumes have softened in recent months. Average daily derivatives turnover fell about 16% in August from a year earlier, while average daily options turnover, which accounts for the bulk of trading activity, declined 20% from July, according to Jefferies, as reported by Reuters. Transaction fees from trading contribute the majority of the exchange’s revenue. A regulatory crackdown on derivative trading and new rules to determine closing trading prices have hurt the exchange business, Reuters noted.

Dolat Capital Market initiated coverage on NSE with a bearish view in July, ETMarkets reported, arguing that tighter regulations governing India’s equity derivatives market could weigh on trading volumes and potentially erode NSE’s market share. The brokerage also cautioned that NSE’s expected rich valuation leaves limited room for further upside.

### IFCI’s Technical and Valuation Picture

IFCI currently commands a market capitalization of around Rs 25,970 crore, according to ETMarkets. Its price-to-earnings ratio stands at 148.14, while price-to-book is 1.67. The stock’s 14-day Relative Strength Index (RSI) is at 71.7, an overbought reading that could signal profit-taking or a pullback, ETMarkets noted. The broader trend remains bullish, with IFCI trading above all eight key simple moving averages, indicating strong price momentum across time frames.

NSE’s shares are proposed to be listed on the BSE, creating a structure where BSE shares are currently listed on NSE and vice versa, ETMarkets reported.