Listing India’s oldest stock exchange

In 2013, Bombay Stock Exchange will join the list of exchanges such as Deutsche Borse AG, London Stock Exchange, NYSE Euronext and Singapore Exchange whose shares are traded on the stock exchanges.

A look at the cash position of BSE, Rs 2,216 crore as on March 2012 means it does not need money for growth but mainly to provide an exit route to its existing investors and also create a more diversified shareholding structure. But would the exits be at prices that make the long holding worthwhile?

BSE in October this year has scored an average daily volume of just 21 and 15 per cent of NSE's numbers in the cash and F&O segment respectively. In the last three years BSE has not witnessed any growth in its net profit. It was Rs 212 crore in March 2009 and was marginally down at Rs 205 crore in March 2012, though total income rose from Rs 421 crore to Rs 578 crore in the same period.

These numbers do not look impressive but the exchange is still eyeing valuations over what the HDFC Bank deal priced it in June 2011. The exchange is learnt to be targeting somewhere around $1billion (around Rs 5,000 crore) while the HDFC Bank share purchase of 10 lakh BSE shares at a price of Rs 375 per share in June 2011 ascribed a value of around Rs 3,900 crore — a premium of around 25 per cent. Two key elements of its valuation are its iconic building and the brand BSE Sensex. The listing will be a stiff exercise for its new chief Ashishkumar Chauhan about the time when Ravi Narain steps down from competitor NSE after a term of 12 years. BSE, NSE and MCX-SX will now form the troika of stock exchanges in India. How the new entrant MCX-SX spells a space for itself could prove to be critical for BSE's public issue.

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