IFCI shares have experienced a remarkable rally, surging 26% over the past week amid growing expectations that the National Stock Exchange IPO may finally receive regulatory approval. The smallcap PSU stock jumped over 10% to ₹62.56 on BSE during morning trading, though it remains down 1% over the last six months.

IFCI's Indirect NSE Exposure

The rally in IFCI shares stems from its indirect stake in NSE through Stock Holding Corporation of India (SHCIL). The financial services company's exposure to the potential NSE listing creates significant value for shareholders.

SEBI Signals NSE IPO Approval

SEBI Chairman Tuhin Kanta Pandey provided the strongest indication yet that NSE's IPO approval is imminent. Speaking at recent events, he revealed that SEBI is in very advanced stages of issuing the no-objection certificate for NSE's public offering, with approval potentially coming this month.

Key developments include:

• SEBI has agreed in principle to NSE's settlement application in the market access case
• Government approval for 2.5% stake dilution in the exchange
• Notification regarding stake dilution expected soon
• NSE has undertaken corrective measures including management changes and compliance strengthening

NSE's Long Journey to IPO

The National Stock Exchange has been pursuing its IPO for several years, facing delays due to governance issues and the co-location controversy. The exchange first filed its draft red herring prospectus in December 2016, but regulatory scrutiny over alleged preferential access to its algorithmic trading platform caused significant delays.

NSE represents India's largest unlisted company by investor count, with approximately 1,77,807 shareholders. The exchange commands a market capitalisation of around ₹5 lakh crores in the unlisted space, making it one of the most anticipated public offerings in Indian capital markets.

Market Impact and Investor Interest

The anticipation surrounding NSE's IPO has created ripple effects across related stocks. Besides IFCI, investors are also positioning in BSE shares, expecting a valuation re-rating post NSE's listing. BSE has gained approximately 6% over the past week, reflecting broader optimism about exchange sector prospects.

In the unlisted market, both NSE share prices and trading volumes have increased significantly in recent days, indicating heightened investor interest as the IPO approval appears increasingly likely.

The Securities and Exchange Board of India (SEBI) has given in-principle approval to the National Stock Exchange's settlement plea in the colocation case, bringing India's largest stock exchange significantly closer to its long-delayed initial public offering. SEBI Chairman Tuhin Kanta Pandey confirmed this development, stating that the regulator agrees with NSE's settlement proposal despite the application still being processed by various committees.

Settlement Details and Timeline

The National Stock Exchange has offered to pay ₹1,388.00 crore in 2025 to settle charges related to the colocation case, where select brokers were allegedly granted preferred access to the exchange. This settlement represents a crucial milestone after years of legal battles that have prevented NSE from going public since 2016.

Pandey indicated that the no-objection certificate for the IPO could be issued within a month, marking the final regulatory hurdle before NSE can proceed with its public offering.

IPO Preparation and Market Impact

NSE Managing Director and CEO Ashish Kumar Chauhan welcomed the in-principle approval as "good news" while noting that official intimation is still pending. Once the NOC is received, NSE will begin preparing its draft red herring prospectus (DRHP), with Chauhan estimating the entire process will take seven to eight months from NOC approval to market launch.

The IPO timeline includes:

• Up to four months to file DRHP after receiving SEBI NOC
• Additional regulatory clearance period for the DRHP
• Seven to eight months total from NOC to market debut

Regulatory Framework Changes

SEBI has implemented supportive regulatory changes that benefit large-scale IPOs like NSE's offering. The regulator reduced the minimum public offer threshold from 5% to 2.5% for companies valued over ₹5.00 lakh crore, a move specifically designed to facilitate public offerings by major entities including NSE and Reliance Jio.

Market Oversight and Due Diligence Concerns

During his address to investment bankers, Chairman Pandey highlighted ongoing challenges in market oversight, particularly regarding disclosure gaps that reduce transparency and investor understanding. He emphasized that SEBI inspections continue to reveal issues with due diligence independence and reliance on issuer undertakings.

Key areas requiring improvement include:

• Capital structure disclosures explaining past capital raisings and preferential allotments
• Business model clarity with transparent revenue and cost drivers
• Enhanced management discussion and analysis beyond basic narration
• Independent verification of working capital and capital expenditure projections

Pandey stressed that investment bankers serve as the "first line of disclosure integrity," ensuring offer documents provide clear, complete, and verifiable information on business operations, risks, governance, and fund utilization. These disclosure gaps often lead to regulatory queries that extend companies' fundraising timelines, underscoring the importance of thorough preparation for major offerings like NSE's anticipated IPO.