It is a big week for the primary market. After more than 10 years of waiting, the NSE IPO is set to debut on September 17. Quite understandably the street is apprehensive about the valuation, the potential of a listing day pop and the valuation gap with BSE, its listed peer thus far. 

Most market gurus, capital market experts and observers believe that NSE makes a strong business case, the pricing also appears fair, but there will always be a debate about the difference in the unlisted shares and the IPO price. 

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NSE IPO: Business dynamics vs pricing of the issue

The Rs 22,561.57-crore NSE IPO has been priced at Rs 1,700-1,785. A closer look at the exchange’s business fundamentals, as shared by the RHP, reflects that this large market infrastructure institution (MII) has some compelling characteristics. 

Its domestic market share is almost close to a monopoly, and this is coupled with a strong global ranking. The exchange’s robust profitability is another key factor to watch. In Q1FY26, the profit margin came in at 58.78% Vs 50.98% in FY26.

As per the company’s red herring prospectus, the transaction charges form the majority of revenue from operations, accounting for 79.44% in Q1FY27 and 78.65% in FY26.

Nakul Sarda, Founder of ProfitGate Capital Services said, “I like NSE — it’s a terrific business. But terrific businesses make terrible entry points when everyone already agrees. HDFC Bank was the most-loved stock in the country and went nowhere for many years. And NSE runs on India doing 80% of the world’s options trading — a number I’d rather see fall than celebrate, and one that’s already halved since SEBI stepped in. Great company. Just not convinced it’s a great stock here.”

NSE IPO valuations: Fair or expensive?

That directly brings us to the valuation of the NSE issue. At the current IPO price band, NSE’s pre-IPO price-to-earnings ratio is around 42.89x and this valuation metric, post-IPO, stands close to 35.4x. 

In a public post on social media platform x, Sandip Sabharwal of Asksandipsabharwal.com believes that “Valuations seem ok. Neither cheap nor expensive, given that CAGR of profits over last 5 years is just 8% and this year could see an earnings decline.It’s at a 15-20% discount to where the unlisted stock was trading a few weeks back.”

Market veteran Arun Kejriwal corroborated the view and pointed out that “the company has done a fair valuation and priced it looking to market conditions, earnings, etc. There will always be a debate amongst analysts that this is one more issue where the unlisted market price is substantially higher than the price band. While the two are not comparable, one must understand the basic difference between a discovered price and a price which is based on few trades, which is the nature of unlisted market.”

NSE IPO price band at a discount to unlisted share price: Should investors worry

That brings us to a point that many investors have been concerned about not just in case of the NSE IPO but several others too, including marquee names like Tata Capital and SBI Funds Management. 

Speaking specifically about the NSE IPO, Kejriwal explained that “the difference between the last unlisted price and the closure of the shares in the lock-in before filing of RHP was around Rs 175. That could become the grey market premium for this share with the upper end of the price band announced at Rs 1,785.”

“Second, from an investor’s perspective, it’s a large issue. It’s not the largest to have hit the market so far, but it’s a large issue and there is enough share available for people. So, don’t get tempted by the grey market. If you believe you want to apply for the share, you have a fair chance of getting allotment. You should apply,” he added. 

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NSE vs BSE: The valuation gap 

The discussion on NSE’s valuation inevitably brings up a comparison with BSE, its only listed peer. One is Asia’s oldest stock exchange, and the other is India’s largest. However, Kejriwal highlighted why “trying to do a fair comparison between BSE and NSE” is not exactly an apple-to-apple comparison. 

He elaborated that “BSE is the listed entity, and NSE is about to get listed. The market dominance of NSE doesn’t make it a compelling comparison with BSE. One is virtually a monopoly. The other (BSE) has a small share and it is a legacy exchange. It is listed but it is not a fair comparison. Once NSE is listed and trading starts on this exchange, you will find pricing correcting to what NSE trades at, and that will become the benchmark.”

NSE Listing likely on September 24

For now all eyes would be glued to the NSE IPO opening on September 17 and the tentative listing on September 24. Will it deliver a listing day pop or, like many other large issues, make a quiet debut on D’Street? It’s a wait and watch for now. 

Disclaimer: Investments in initial public offerings (IPOs) carry market risks, including loss of principal. Quotes and commentary sourced from social media or analysts do not constitute direct investment recommendations. The price band and valuations cited are sourced directly from the Red Herring Prospectus (RHP) and official filings. Investors are advised to evaluate company fundamentals, consult a SEBI-registered financial advisor, and read the official offer documents carefully before making any investment decision.

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