Nirmal Bang recommend to subscribe to BSE Limited IPO
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BSE Ltd. (BSE or Exchange) is the first stock exchange of Asia, incorporated in 1875. BSE was the world's largest exchange by number of listed companies, and India's largest and the world's 10th largest exchange by market capitalization, with US$ 1.7 trillion in total market capitalization of listed companies as on Oct 2016. BSE provides a market for listing and trading in various types of securities. BSE operates in three segments; (i) listing business consisting of the primary market relating to the issuance of new securities; (ii) market business: which consists of the secondary market, which relates to the purchase and sales of previously-issued securities; (iii) the data business, which consists of sale and licensing of information products.
(a) Strong brand recognition with a track record of innovation
(b) Diversified and integrated business model
(c) Diversified sources of revenue and strong financial
(d) Development and introduction of new products
Details of the Issue:
The public issue of BSE consists of offer for sale of 1.54 Cr equity shares by existing shareholders aggregating to Rs. 1,243 Cr (at upper price band).
Objects of the Issue:
Listing of share and exit to some of the existing shareholders.
Valuation and Recommendation:
Though BSE was the first stock exchange in Asia, incorporated in 1875 but remain much behind NSE and had market share of 15% in cash segment (as on FY16) and negligible presence in Derivative segments. Due to lagging behind in adoption of derivative, BSE lost its dominant position to NSE even in Cash segment as well. Now BSE is trying to strike first in many of the newer product like Currency Derivative, MF, Debt Market, International Exchange etc. We feel success of any of the activity can bring growth for BSE. Anyhow BSE is still second largest exchange in volume term and world's largest exchange by number of listed companies. We feel With Market Cap of Rs. 4,326 Cr at upper end of price band and Free cash of Rs. 2,681 Cr, the Enterprise value of Rs. 1,646 Cr is attractively priced considering the optional value of success of any new initiative. At Upper band of Rs. 806, BSE is offered at 15.9x EV/EBITDA and 26.7x PE of H1FY17 annualised earnings. We recommend subscribing to the issue.
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Founded in 1986 by Nirmal Bang, the Nirmal Bang is recognized as one of the largest retail broking houses in India, providing an array of financial products and services. Their retail and institutional clients have access to products such as equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS. The Group is headed by Mr. Dilip Bang and Mr. Kishore Bang.
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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.
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