India’s capital market is gearing up for two of its largest initial public offerings (IPOs) as Jio Platforms and National Stock Exchange (NSE) have filed draft red herring prospectuses (DRHP) with market regulator SEBI this week to raise a combined roughly $7 billion.
The sheer size of the two IPOs, coming on the heels of the blockbuster SpaceX listing in the US market, has created strong buzz among investors, given that both companies are dominant players in their respective markets and have seen strong growth in the last couple of years.
Experts believe that Jio and NSE have the potential to deliver strong returns to investors in the long run.
However, they also cited that listing gains will largely depend on how attractive the two IPOs are priced.
"Listing gains for upcoming big IPOs of NSE and Jio would largely be a function of pricing and how attractive the investment bankers price the IPO and leave something on the table to attract retail investors. Having said that, I think retail investors should avoid looking at both these IPOs purely from a listing gains perspective,” said Narendra Solanki, Head Fundamental Research, Investment Services, Anand Rathi Share and Stock Brokers Limited.
He added, “Instead, investors should focus on the quality of the underlying business, growth prospects, competitive positioning, and valuation at the time of the IPO. If the pricing is reasonable relative to long-term earnings potential, these companies can produce long-term wealth creation opportunities rather than short-term gains.”
Jio Platforms, the digital service arm of billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL), is expected to launch $4 billion or Rs 37,700 crore in the near future, making it the largest initial share sale in India’s capital market history.
According to the filed DRHP on Friday, Jio’s IPO is structured as a primary issuance of 270 million (27 crore) equity shares, representing approximately 2.9 per cent of post-issue share capital.
As per market analysts, Jio’s post-issue valuation could range between Rs 12.5 and 13 lakh crore, also making it one of the most valuable companies on the bourses by market capitalisation.
NSE, India’s largest stock exchange, filed draft papers with SEBI on Wednesday for a gargantuan public offering pegged at roughly Rs 30,000 crore.
The IPO comprises the sale of 14.89 crore shares by existing shareholders, who will collectively divest nearly 6 per cent of their stake in the exchange.
NSE, which has around 1.8 lakh shareholders, is valued at over Rs 5 lakh crore with its shares trading in the range of Rs 1,950-2,050 in the unlisted market, according to market participants. Upon listing, NSE is expected to become one of the most valuable listed financial institutions in India.
At present, Hyundai Motor India Ltd holds the record of launching India’s largest IPO at Rs 27,859 crore, followed by LIC, Paytm and Tata Capital. A frequent investor concern is that large IPOs produce muted debuts with minimal listing gain.
Hyundai’s shares debuted on the bourses at a discount of about 1.5 per cent in October 2024, while LIC’s Rs 20,557 crore IPO launched in May 2022 was listed at an 8 per cent discount. Paytm’s Rs 18,300 crore IPO in November 2021 debuted with a discount of over 9 per cent and dropped more than 20 per cent within the first 15 minutes of trading. Shares of Tata Capital, which launched a Rs 15,512 crore IPO, listed at a modest premium of 1.23 per cent.
Solanki stated that NSE benefits from a dominant market position, strong profitability, network effects, and increasing participation in Indian capital markets. On Jio, he said that the company has established itself as a leader in India's digital ecosystem with significant opportunities across telecom, broadband, digital services, and enterprise solutions.
“While a part of future returns would depend on IPO valuations, which are yet to be declared, both these businesses have the scale, market leadership, and future growth drivers that could support shareholder value creation over the long term. Investors should balance business quality with the price they pay, as valuation remains a key determinant of future returns,” said Solanki.
The two IPOs are also expected to lift the broader primary market, which had seen tepid activity in the last couple of months due to the West Asia conflict. As per Prime Database, the market saw only 2 issues in April and none in May.
Vincent K A, Senior Research Analyst at Geojit Investments, said that NSE’s IPO is expected to attract strong investor interest, supported by its dominant market position, robust profitability, and direct exposure to the long-term growth of India’s capital markets.
He added that the IPO appears more compelling as a long-term investment opportunity, benefiting from India’s ongoing financialization, rather than a short-term gains play.