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BSE IPO Details & Review – Price Band, Issue Price, Opening date

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BSE Limited is the owner and operator of BSE Exchange (Bombay Stock Exchange), India largest stock exchange by number of companies listed.

Issue Details

  • IPO Open :  23 Jan to 25 Jan 2017
  • Issue Price band:  Rs 800 – 850
  • Issue Size:  approx Rs 1311 crore
  • Market lot : 17
  • Max Shares for Retail – 221

IPO Issue Allocation

  • Qualified institutional buyers (QIBs) –  50% per cent of the total issue size.
  • Non-institutional investors (NIIs) –  15% per cent of the issue size.
  • The retail quota limit in the issue = 35% 

 

Objective of the issue:

The company will not receive any proceeds of the offer and all the proceeds of the offer will go to the selling shareholders in the proportion of the equity shares offered by them

The objects of the offer (OFS) are:

  • 1. To achieve the benefits of listing the equity shares on NSE and
  • 2. For the sale of equity shares by the selling shareholders.

 

Background:

 Bombay Stock Exchange was established in year 1875 as the first stock exchange in Asia. Today BSE has over 5000 companies listed on it, the highest in any exchange around the world. Worlds two leading global exchanges, Deutsche Bourse and Singapore Exchange are strategic partners of BSE. BSE offers trading in Equity, Debt Instruments, Derivatives, Mutual Funds and SME Equity. The S&P BSE SENSEX is India most widely tracked stock market benchmark index. BSE also offer services including risk management, clearing, settlement, market data services, IT services and solutions, licensing index products such as the S&P BSE SENSEX and financial & capital markets trainings.

BSE Limited own  and  operate  the  BSE  exchange  platform (formerly,  the  Bombay  Stock  Exchange),  the  first  stock exchange  in  Asia,  which  was  formed  on  July  9,  1875.  As  of  June  30,  2016,  the  BSE  was  the  world’s  largest exchange  by  number  of  listed  companies,  and  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.

As  the  operator  of  the  BSE,  we  regulate  listed  issuers  and  provide  a  market  for  listing  and  trading  in  various  types of securities as may be allowed by SEBI from time to time. We operate in three primary lines of business, namely:

1. the  listing  business ,  which  consists  of  the  primary  market,  which  relates  to  the  issuance  of  new  securities;

2. the  market  business ,  which  consists  of  (i)  the  secondary  market,  which  relates  to  the  purchase  and  sales  of  previously issued  securities,  (ii)  BSE  StAR  MF  (“BSE  StAR”),  our  online  platform  for  the  placement  of  orders  and  redemptions  of  units  in  mutual  funds,  (iii)  NDS -RST,  our  platform  for the reporting of over-the-counter corporate bond trading, (iv) membership, which includes membership in the  Exchange,  membership  in  our  clearing  corporation  ICCL,  and  depository  participants  in  our depository CDSL, and (v) post – trade services, namely the clearing corporation and depository; and

3.the data business, which consists of the sale and licensing of information products.

As at June 30, 2016, the BSE had 1,440 unique members across all segments, and in Fiscal Year 2016 the BSE accepted an average of 284.92 million orders and 1.55 million trades in equity shares per trading day, placing it as  the  12th  most  active  exchange  in  the  world  in  terms  of  electronic  book  trades  in  equity  shares.  (Source: World  Federation  of  Exchanges(“WFE”) statistics).  During  Fiscal  Years  2014,  2015  and  2016  and  the  three months  ended  June  30,  2016,  the  BSE  reported  24,663  million,  63,385  million,  70,376  million  and  17,618 million electronic book orders in equity shares, respectively

 

Financials:

In FY2016, revenue  from operations (comprised of revenue  from securities  services,  services  to  corporate  and  data  dissemination  fees),  income  from  investments  and  deposits and other income comprised of 64.8%, 28.8% and 6.4% of our total revenue, respectively.

In the three months ended  June  30,  2016,  revenue  from  operations,  income  from  investments  and  deposits  and  other  income comprised of 63.4%, 26.5% and 10.1% of our total revenue, respectively.

Our EBITDA margin for FY 2014, FY 2015, FY 2016 and the three months ended June 30, 2016 was 54.3%, 48.9%, 45.7% and 47% , respectively. Our profit after tax margin for FY 2014, FY 2015, FY 2016 and the three months ended June 30, 2016 was 25.5%, 20.8 %, 18.6%and 23.2%, respectivel

Promoters :  Deutsche Borse, Singapore Exchange, SBI, LIC holds 4.7% each in BSE.

Competitors :  NSE

Anchor Investors:  Will be known one day before the issue open

Valuation as compared to its peers:  Attractively Priced

At the upper end of the price band, the stock is available at P/E of 28x based on annualized FY17E earnings. It’s nearest comparable MCX is trading at P/E of 39x based on FY17E earnings. So it is attractively priced.
 
Last 3 years consolidated EPS is 11.7 and on that basis the issue is priced at 72 times trailing PE
 
 
Brokerage Recommendations:
SPA Securities Subscribe
   
   

Should you invest:   

As there are not many listed peers, you have very limited options if you want to invest in this space. Given that it is market leader, there will be lot of institutional interest in this stock as well. So on that basis, you can consider to invest for long term

Disclaimer:  The articles or analysis on this website should not be constituted as Investment advice. Please consult your financial advisor before making any investments.

 

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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