Ahead of its IPO, the National Stock Exchange (NSE) has reported record profit growth and revenues. NSE’s net profit jumped by more than five times on a consolidated basis in the December (2021) quarter to ₹1,348 crore compared to ₹208 crore reported during the same quarter in 2020. NSE’s consolidated net profit for nine months (up to December 2021) of the current financial year (FY) stood at ₹3,618 crore compared to the last full financial year (FY) profit of ₹3,600 crore.
Both NSE and BSE have witnessed a sharp jump in business in the past year due to burgeoning equity markets. The BSE, which will be announcing a bonus and quarterly results on February 8, too is expected to report robust profits on the line of NSE.
For the nine months of the current FY ended December 2021, NSE reported consolidated net revenues of ₹6,084 crore. For the December 2021 quarter, the NSE’s revenues doubled to ₹2,367 crore from ₹1,411 crore reported during the same quarter of the year 2020.
For the December 2021 quarter, NSE reported an earnings per share (EPS) of ₹27.25 on a consolidated basis compared to just ₹4.22 during the same quarter of 2020. NSE’s nine-month EPS for the current financial year stood at ₹73, which is way higher than the last full financial year’s EPS. The NSE has revealed that it had earned Rs 1729 crore via stake sale in Computer Age Management Services (CAMS).
NSE shares are trading in the range of ₹3,000 to ₹3,300 in off-market deals. But the recent results could boost it further. The BSE has a current PE 40 but if its results are robust like NSE, it could get further rerated, analysts said. At ₹3,300, the NSE is valued at over ₹1,63,000 crore and the BSE is currently valued at ₹9,995 crore.
Awaits final verdict in algo trading case
NSE is awaiting the final verdict in the co-location or algo trading case from the Securities and Appellate Tribunal (SAT) to file for its IPO with market regulator SEBI. The market regulator will take a call on NSE IPO only after the government makes its stand clear on an extension of term of incumbent SEBI chairman Ajay Tyagi, the sources said. The government decision on SEBI chairman is expected within the next couple of weeks. The sources said that the current regime in SEBI is in favour of giving NSE the go-ahead for its IPO post the SAT verdict. However, SEBI or NSE is expected to approach the Supreme Court (SC) if the verdict is not in their favour.
NSE revealed that it has filed a consent application with SEBI for a case relating to ‘trading access point.’ Sources told BusinessLine that the exchange would have to pay several crores in disgorge even if SEBI accepts its settlement offer. However, NSE says it has not provided for it in its balance sheet so far. NSE believes that pending the conclusion of this matter with SEBI, a reliable estimate of obligation in respect of it cannot be made as of now. Therefore no provision or adjustment to this effect has been made.
In the past couple of years, several show-cause notices (SCN) have been issued to NSE, the sources said. It includes SCN about deficiencies in ‘orderly execution of trades’ and for not having adequate surveillance systems in place to ensure market integrity. SEBI is also probing the role of NSE at the institutional level separately.