BSE Ltd IPO: Comparison with Indian Peers

BSE Limited IPO is all set to raise around Rs. 1200 crore and will open on January 23 and close on January 25. The IPO consists of a stake sale of about 1.54 crore shares by  262 of BSE’s shareholders. The shares in the IPO will be offered in the price band of Rs 805 to Rs 806. BSE is the oldest bourse in India and provides a market for listing and trading in various types of securities as permitted by SEBI. 

Related Posts: 1) BSE Ltd.: IPO Review 2) BSE Ltd: Run Up to the IPO

About BSE

BSE Limited owns and operates the BSE exchange platform (formerly, the Bombay Stock Exchange), the first stock exchange in Asia which dates back to 1875. BSE Limited had the largest number of companies listed i.e. 5836 companies were listed at the end of December 2015, with 5,836 companies. However in terms of value of transactions, BSE is far behind international exchanges led by NYSE & NASDAQ. Based on market capitalization, BSE is India’s largest and the world’s 11th largest exchange by market capitalization, with US$ 1.52 trillion in total market capitalization of listed companies.

Comparison: BSE vs NSE vs MCX

Based on expected issue size of 10000 crore by NSE and its offering 11.14 crore shares, NSE IPO value could be be range of Rs. 900/- based on face value of Rs.1/- per share.

The only listed exchange in India though not fully comparable is Multi Commodity Exchange (MCX).

  HY2017 Year2016 HY2017 Year2016 HY2017 Year2016
Total Revenue 359.8 658.27 1343.51 2359.17 189.2 333.33
PBT 151.92 238.16 855.28 1495.11 99.08 83.73
PAT 107.5 132.98 588.32 975.21 70.46 42.39
Share Capital 10.736 10.736 45 45 51 51
Reserves   2512   6822.67   1156.1
FV 2 2 1 1 10 10
EPS (Annualised) 40.06 24.77 26.14 21.67 27.64 8.31
Price ( Approx) 806 806 900 900 1208 1208
PE Ratio 20.12 32.54 34.43 41.53 43.7 145.37
BV   467.96   151.61   226.69
P/BV   1.72   5.94   5.33
Market Cap   4326.61   40500   61608
  • On account of  the significant jump in the profitability in HY17 for all three exchanges, annualized figures based on HY17 results have also been indicated.
  • While NSE is a notch up than BSE, BSE can safely be assumed to better than MCX.
  • MCX is present quoting at a PE multiple of 43.7 (annualized) and BSE  at the IPO price will command a PE multiple of 20.12 (annualized). NSE at the assumed IPO price of 900 shall be at a PE multiple of 43.2. Thus BSE IPO is expected to leave something on the table for the investors.
  • The P/BV ratio of BSE(1.72) is quite low compared to NSE & MCX(>5). This is on account of huge amount of reserves on books of BSE, being a much older exchange. This factor also justifies the pricing of BSE IPO.
  • In terms of profit margins, NSE earns a net profit margin > 40% . In Fy16 this has stood at 20% for BSE, though some improvement has been seen in HY2017. 
  • While NSE out scores BSE on many counts, BSE IPO price provides comfort and appears reasonable.

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