Dissecting Big Bang IPOs Of BSE & NSE
1/19/2017 11:20 AM Thursday
Lohit Bharambe dissects the two blockbuster IPOs set to hit the Dalal Street while Joydeep R. Ray speaks to the ‘Bosses of the Bourses’ to know what is happening in the ground:
The hottest topic amongst investors is an initial public offer by companies, but the anticipation of the investors is highest when the two big bourses of the country, Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE), plan to self-list themselves. These two premier bourses will be soon coming out with their respective IPOs.
At the global level, out of the 60 stock exchanges that operate across the world, only around 10 are listed. Some of the largest exchanges, going by their traded turnover, such as the NYSE, Nasdaq, Euronext, Hong Kong Exchange and the Japan Exchange are listed and owned by the public shareholders. This is not surprising as the larger and more profitable exchanges are likely to find more takers.
These listed exchanges have continued to maintain a leadership position in terms of the securities traded, and investor experience in these bourses has not been materially different from those that are not listed. Investors are willing to pay decent multiples to these listed exchanges, with their PE multiples ranging from 17 to over 40.
The interest rate cut cycle in the country is expected to continue in future, giving a fillip to stock market investment. An investment in the stock market for more than one year is right now tax free, although there are chances of increasing the investment horizon of tax bracket to three years from the existing one year in the upcoming Union budget. Reducing the interest rates will give further reduce the flow of investments into regular instruments such as fixed deposits, PPF, EPF, postal deposits and LIC schemes. The money flow from these investments will come into the stock markets.
Further, it will drive volumes in the capital markets with the spread of more financial awareness in the country. The investments can come through the direct route and also through indirect routes such as mutual funds, equity funds, etc. Therefore, the potential of big business will drive robust financial outlook for both the bourses.
Though there is confusion amongst investors about IPOs of stock exchanges, we at Dalal Street investment Journal, present an exhaustive report to clear the confusion and show the right direction to all investors.
FINANCIALS OF BOURSES
On the financial front, BSE’s topline has increased 5.37 per cent to Rs. 658 crore in FY16 as compared to previous financial year. However, the exchange’s EBITDA decreased 17.07 per cent to Rs. 274 crore in FY16 on yearly basis due to the increase of 27.05 per cent in administration and other expenses during the year. Its EBITDA margin contracted by 1125 basis points to 41.64 per cent in FY16 as compared to the previous financial year. BSE’s net profit declined 37.8 per cent to Rs. 330 crore in FY16 on a yearly basis.
On the segmental revenue front, BSE has earned 27 per cent from transactions, 24 per cent from listing, 42 per cent from other sources and 3 per cent each from market data and IT.
On the financial front, NSE’s topline increased 3.45 per cent to Rs. 2,354 crore in FY16 as compared to the previous financial year. The exchange’s EBITDA too rose 1.23 per cent to Rs. 1731 crore in FY16 on a yearly basis. Its EBITDA margin contracted by 163 bps to 73.53 per cent in FY16 as compared to the previous fiscal. NSE posted net profit of Rs. 654 crore in FY16 as against net profit of Rs. 1027 crore in FY15. The exchange witnessed loss of Rs. 7,662 crore towards contribution to core settlement guarantee fund in FY16 as against Rs. 170 crore in FY15. The bourse had cash and cash equivalents and cash at bank of Rs. 8,937 crore as on September 30, 2016.
Find More Articles on: DSIJ Magazine, Special Report, Product, DSIJ