NSE IPO Proxy Play! Why Smallcap IFCI Shares Jumped 26% in Just 1 Week

Amid Sebi chief Tuhin Kanta Pandey’s comments that the capital markets regulator may approve the National Stock Exchange’s (NSE) much-awaited IPO this month, shares of smallcap IFCI have surged nearly 26% in the past week alone. PSU shares this morning on BSE at Rs. Up more than 10% at 62.56, but is down 1% over the past six months.

The NBFC has an indirect stake in the NSE through the Stock Holding Corporation of India (SHCIL). At the end of December quarter, SHCIL had 4.4% ownership in NSE. In the unlisted market, NSE shares traded at Rs. Around 2,100 are being traded. Accordingly, SHCIL’s stake in NSE is Rs. 23,000 crores. IFCI holds 52% stake in SHCIL.

NSE IPO coming soon?

Last week, the Sebi chief had said that it is at a very advanced stage of issuing NOC (No-Objection Certificate) for the NSE IPO and it could happen this month itself. At another event on Thursday, he said that SEBI has agreed in principle to NSE’s settlement plea in the long-running unfair market access case.

He also said that the government has approved a 2.5% stake reduction in the exchange and a notification will be issued soon. The development is being seen as the strongest sign yet that the country’s largest stock exchange may finally be inching closer to an IPO.

The NSE has been seeking regulatory approval for its IPO for several years, citing governance lapses and co-location disputes that came under Sebi’s scrutiny. The exchange first filed its draft red herring prospectus (DRHP) in December 2016, but the process was delayed amid regulatory action over allegations of preferential access to its algorithmic trading platform.

In August 2024, NSE again applied to SEBI for a fresh no-objection certificate to proceed with its public issue. Subsequently, in October 2024, the exchange settled the Trading Access Point (TAP) Architecture and Network Connectivity case by paying a penalty of ₹643 crore. The case relates to alleged shortcomings in dealing with instances where certain high-frequency traders were found to be exploiting system access.

Pandey said the NSE has since undertaken several corrective measures, including changes in senior management, restructuring of its board, strengthening the compliance framework and resolving past regulatory matters.

NSE has an unusually large shareholder base for an unlisted company. With approximately 1,77,807 shareholders, it is the largest unlisted company in India by number of investors. Over the past few days, unlisted NSE stocks have seen an increase in both price and volume. In share unlisted space around Rs. It has a market capitalization of 5 lakh crores.

Apart from IFCI, investors are also betting that another stock exchange, BSE, may also see a valuation re-rating after NSE’s listing. Shares of BSE have risen by around 6% in the past one week.

(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)