Smallcap stock jumps 24% in a week as NSE stake could be valued at Rs 850 crore

The rally follows the filing of the National Stock Exchange’s (NSE) Draft Red Herring Prospectus (DRHP) with Sebi for what could become India’s largest-ever initial public offering. Documents filed by the exchange show that Maithan Alloys, one of India’s leading ferroalloy manufacturers and exporters, owns a 0.17% stake in NSE, equivalent to 41,25,500 shares.

Based on NSE’s last traded price of Rs 2,055 in the unlisted market prior to the DRHP filing, the value of Maithan Alloys’ holding stands at roughly Rs 850 crore.

The proposed issue, estimated at around Rs 30,000 crore, is entirely an offer-for-sale (OFS) of up to 148.9 million shares, representing nearly 6% of NSE’s paid-up equity capital.

If completed at the expected size, it would surpass Hyundai Motor India‘s Rs 27,000 crore IPO in 2024 to become the largest public issue in the country. While Reliance Industries‘ Jio is also expected to pursue a larger listing, it is yet to file its draft papers.

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State Bank of India (SBI) stands to be among the biggest beneficiaries of the IPO. The country’s largest lender is poised to monetise a long-held investment in NSE, translating into an estimated gain of 256,775% based on its acquisition cost.
Several other public sector and institutional investors are also in line for substantial returns from the offer-for-sale.
The New India Assurance Company Ltd. and National Insurance Company Limited have the lowest acquisition cost among the selling shareholders at just 32 paise per share, putting them on track for returns of as much as 6,422 times their investment. Stock Holding Corporation of India is offering around 11 million shares that were acquired at 46 paise apiece, implying a potential return of about 4,467 times.

Among foreign investors, Singapore sovereign wealth fund Temasek Holdings Pte is selling approximately 11.25 million shares through Aranda Investments and is set for a return of around 33 times. Global investment bank Morgan Stanley is expected to earn roughly 31 times its original investment.

Life Insurance Corporation of India (LIC), NSE’s largest shareholder with a stake of nearly 11%, is not participating in the offer-for-sale. LIC was among the earliest investors in the exchange when it subscribed to NSE shares in 1992 and will continue to hold its stake.

The DRHP states that up to 50% of the issue will be reserved for qualified institutional buyers (QIBs), while at least 15% will be allocated to non-institutional investors and 35% to retail investors.

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