IFCI shares rally 6% as NSE IPO buzz lifts sentiment; stock gains 35% in a month

Shares of IFCI jumped as much as 6.35% to Rs 102 on the NSE on Friday, as growing optimism around the long-awaited NSE IPO put the spotlight on the state-owned financial services company’s indirect exposure to the exchange.

The latest surge adds to a strong recent run for the stock. IFCI shares have rallied nearly 35% over the past month, reflecting growing investor interest as expectations build that NSE could finally move closer to its much-anticipated public listing.

IFCI owns more than 50% of Stock Holding Corporation of India (SHCIL), which in turn holds over 4% of NSE. This gives IFCI an indirect stake in the country’s largest stock exchange and makes its shares particularly sensitive to developments surrounding NSE’s proposed IPO.


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NSE IPO moves closer?

The IPO story gained fresh momentum after Sebi Chairman Tuhin Kanta Pandey said the regulator was close to approving the draft red herring prospectus (DRHP) filed by NSE.

The potential listing has already attracted significant market attention. A Bloomberg report last month said NSE is seeking a valuation of up to Rs 5.26 lakh crore ($55 billion) for the proposed IPO.

NSE had filed its draft prospectus in June for an offering that will comprise entirely of secondary share sales by existing shareholders. According to the filing, shareholders could sell as many as 14.89 crore shares, equivalent to around 6% of the exchange’s paid-up equity capital.

For IFCI investors, the eventual valuation at which NSE enters the public markets could be an important trigger. A successful and richly valued NSE listing could potentially shine a brighter light on the value of IFCI’s indirect holding through SHCIL.

However, the outlook is not without risks. In July, Dolat Capital Market initiated coverage on NSE with a bearish view, arguing that tighter regulations governing India’s equity derivatives market could weigh on trading volumes and potentially erode NSE’s market share.

The brokerage also cautioned that NSE’s expected rich valuation leaves limited room for further upside.

Meanwhile, NSE’s shares are proposed to be listed on the BSE, creating an interesting market structure: BSE shares are currently listed on NSE, while NSE shares would be listed on BSE.

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IFCI share price and technical indicators

IFCI shares have rallied nearly 35% over the past month, reflecting strong buying interest in the stock. The company currently commands a market capitalisation of around Rs 25,970 crore, while its 52-week high stands at Rs 102.

From a valuation perspective, IFCI’s price-to-earnings (P/E) ratio stands at 148.14, while its price-to-book (P/B) ratio is 1.67.

On the technical front, IFCI’s 14-day Relative Strength Index (RSI) stands at 71.7. An RSI reading above 70 is generally considered to indicate an overbought zone, suggesting that the stock could witness some profit-taking or a pullback after its recent sharp rally.

The broader trend, however, remains bullish. IFCI is currently trading above all eight key Simple Moving Averages (SMAs), indicating strong underlying price momentum across different time frames.

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