National Stock Exchange of India Limited (NSE), the world's largest derivatives exchange in terms of volume, is ready to file draft red herring prospectus (DRHP) for its initial public offering (IPO), but it awaits a signal from the market regulator SEBI, says CEO Ashishkumar Chauhan, who is credited for successfully handling the listing of BSE.
“The regulator (SEBI) has to give approval for the IPO. Once they give the approval, we’ll submit a revised DRHP,” Chauhan said on Thursday.
The listing of NSE is long-awaited as its first attempt to launch the IPO in 2016 was derailed after the bourse got embroiled in the co-location controversy.
NSE, one of the country’s leading exchanges, had initially filed its IPO document with the Securities and Exchange Board of India (SEBI) in December 2016, and was reportedly looking to raise around ₹10,000 crore. Existing shareholders of NSE such as American investor Tiger Global Management, Aranda Investments, SAIF Partners, Norwest Venture Partners, Citigroup Strategic Holdings, Goldman Sachs, State Bank of India, and others were expected to be diluting a 23% stake in the exchange through an offer for sale.
The DRHP was filed at a time when the company was looking for a new managing director after the sudden exit of then MD & CEO Chitra Ramkrishna. Chitra had stepped down from her post amid allegations of misuse of its co-location facility and giving some of the traders preferential access to trade data.
In July 2022, the Securities and Exchange Board of India (SEBI) appointed Ashish Kumar Chauhan as MD & CEO of NSE for a period of five years. This is his second stint at NSE after working at BSE (formerly Bombay Stock Exchange) as CEO between 2009-2022. A technocrat from the IIT-Bombay and alumnus of the IIM-Calcutta, Chauhan first joined the NSE in 1993, when the bourse was being set up as a counterweight to the Bombay Stock Exchange (BSE). During his years with the BSE, the bourse successfully completed the IPO in 2017, which got oversubscribed 51 times with close to 12 lakh applications.
In the December quarter of FY24, NSE had posted consolidated net profit of ₹1,975 crores on a consolidated basis for Q3 FY24, up by 8% on a year-on-year basis. The net profit margins for Q3 FY24 stood at 51%.
The consolidated revenue from operations was at ₹3,517 crores for Q3 FY24, up by 25% on a year-on-year basis. Apart from trading revenue, the revenue from operations was also supported by other revenue lines which mainly include data centre & connectivity charges, clearing services, listing services, index services and data services.
On a standalone basis, the NSE reported a total operating income of ₹3,170 crore for Q3 FY24, showing a growth of 21% on a year-on-year basis which was ₹2,629 crore for the corresponding quarter last year. It incurred total expenses of ₹1,620 crore for Q3 FY24. Almost 50% of these expenses amounting to ₹810 crores, are towards SEBI Regulatory Fees, additional contribution to Core SGF as desired by SEBI and Contribution to IPFT.
At the operating EBITDA level NSE, on a standalone basis, posted an EBITDA margin of 52% for Q3 FY24 compared to 73% in the corresponding quarter last year.
On the trading volumes front, cash markets recorded an average daily traded volumes (ADTVs) of ₹80,512 crore (up 50% YoY) while the equity futures reached an ADTV of ₹1,31,010 crore (up 18% YoY) and equity options (premium value) ADTVs stood at ₹56,707 crore (up 28% YoY) for Q3 FY24.
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