Explained: Why NSE unlisted shares hit an all-time high
The National Stock Exchange (NSE) is back in the spotlight as its unlisted shares surged to a record Rs 2,100 on Monday, fuelling renewed investor excitement around its long-delayed public debut. At the heart of this rally is growing anticipation that the country's largest stock exchange may finally overcome regulatory hurdles blocking its public debut.According to a report by The Economic Times, NSE is offering a record Rs 10 billion ($118 million) to settle a long-standing co-location case with the Securities and Exchange Board of India (Sebi). The potential deal, which is still under consideration, could pave the way for a long-delayed IPO by securing a crucial no-objection certificate from the regulator.Sebi had earlier put NSE's IPO dreams on ice due to allegations dating back to 2015 that certain high-frequency traders received unfair access to its co-location servers. This not only torpedoed NSE's IPO attempt in 2016 but also led to a six-month capital markets ban. In October, the exchange paid Rs 6.4 billion to settle one part of the case.Signs of a broader regulatory thaw began emerging last week when Sebi chairperson Tuhin Kanta Pandey said the regulator was 'working closely' with NSE to resolve all outstanding matters. 'I can't give you the timeline, but it will be done soon. NSE and Sebi are talking. They are resolving the issues,' he said at a recent event.At NSE's recent earnings call, CEO Ashish Kumar Chauhan said Sebi had flagged four key areas that need resolution before the IPO can proceed, including remaining legal cases.Meanwhile, investors aren't waiting. Market enthusiasm is spilling over into the grey market, where optimism around a post-settlement listing is feeding a surge in unlisted share activity. The buzz is further amplified by recent marketing materials posted by US-based Drew Investments, which is raising a special purpose vehicle to invest in NSE at valuations ranging from Rs 1,550 to Rs 1,700 per share. According to Drew, the exchange's private valuation has climbed from $36 billion in September to $50 billion now.'The rise in NSE's unlisted share price reflects strong investor demand ahead of the IPO, with expectations of significant returns post-listing,' said Krishna Patwari, Founder and Managing Director of Wealth Wisdom India.Patwari also pointed to the exchange's blockbuster year in primary markets. 'NSE facilitated 268 IPOs in 2024 alone — 90 on the mainboard and 178 in the SME segment — raising Rs 1.67 lakh crore. That's the highest number in any calendar year,' he said, noting it underlines growing confidence in India's capital markets.Financially, NSE continues to deliver. For the March quarter (Q4 FY25), it reported a consolidated net profit of Rs 2,650 crore, a 7% year-on-year increase. Revenue from operations, however, dipped 18% to Rs 3,771 crore. The exchange also announced a dividend of Rs 35 per share for FY25.Still, experts warn that investing in unlisted shares is not without risks. These include poor liquidity, valuation opacity, and regulatory uncertainties. Delays in IPO clearance or changes in SEBI's stance could disrupt expected returns.
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