IFCI Stock Plummets as NSE IPO DRHP Files: Profit Booking Reverses Rally on $57 Billion Valuation Hype
Shares of IFCI experienced a sharp decline, falling up to 10% to an intraday low of Rs 80.61. This steep fall comes after the stock had witnessed significant gains in recent months. The movement is primarily attributed to profit booking amidst developments surrounding the proposed Initial Public Offering (IPO) of the National Stock Exchange (NSE).IFCI’s interest in the listing stems from its control over Stock Holding Corporation of India, which holds a 4.4% stake in NSE. This holding meant that expectations regarding value unlocking from the exchange's IPO had previously fueled a strong rally in IFCI shares.
Profit Booking and Technical Outlook for IFCI
Technical analysts point to heavy profit booking as the primary driver behind today's downward pressure on the stock. Rupak De, a technical analyst at LKP Securities, noted that IFCI is likely to find support around Rs 80. Furthermore, he warned that any breach of this specific level could lead to intensified selling pressure in the market.The decline contrasts sharply with recent performance metrics. IFCI shares rose by 50% over the last month before today’s significant drop. For instance, on June 18, IFCI had closed 8.5% lower at Rs 82.45 apiece, indicating underlying volatility despite the overall market momentum.
NSE IPO Valuation and Investment Windfalls
The IPO filing documents provide insight into the scale of the transaction. According to the NSE's DRHP document, Stock Holding Corporation plans to monetize part of its investment by offering nearly 1.1 crore shares under the offer-for-sale component. This stake sale is set to attract major institutional investors.Based on the acquisition prices disclosed in the draft prospectus, top ten investors are positioned for a windfall valued at some $2.6 billion. State Bank of India (SBI) is expected to lock in approximately Rs 4,700 crore. Similarly, MS Strategic (Mauritius), a Morgan Stanley fund, is calculated to make about Rs 2,934 crore.
Global Investors Set to Gain Amid Billion-Crore Opportunities
The global interest in the NSE IPO is significant and multi-faceted. Temasek from Singapore stands set to make Rs 2,067 crore via its Aranda Investment arm. Meanwhile, Canada Pension Plan Investment Board anticipates a gain of Rs 1,871 crore through participation.Currently, NSE holds over 200,000 investors across its platform. The stock trades near Rs 2,000 in the unlisted market on trading platforms, suggesting an immense valuation potentially reaching $57 billion. This places the exchange in a strong position to become the world's fifth most valuable bourse after the London Stock Exchange Group.
Industry sources reported that NSE may offer shares at a discount of 5% to 10% compared to private market valuations. The discussion around this pre-IPO valuation stands around Rs 1,900 per share.
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