Maithan Alloys Surges 24% as NSE IPO Unlocks ₹850 Crore Stake Value

Smallcap stock Maithan Alloys has witnessed a massive rally, jumping nearly 25% in a single week following news of the National Stock Exchange's (NSE) potential mega IPO. The surge is driven by the revelation of the company's significant equity holding in the exchange, which is poised to become India's largest-ever public offering.

The NSE IPO: A Record-Breaking Landmark

The National Stock Exchange has filed its Draft Red Herring Prospectus (DRHP) with SEBI, outlining an offer-for-sale (OFS) that could redefine the Indian primary market. The proposed issue is estimated at approximately ₹30,000 crore, involving the sale of up to 148.9 million shares, representing nearly 6% of NSE's paid-up equity capital.

If the IPO reaches its expected size, it will surpass Hyundai Motor India's ₹27,000 crore listing in 2024 to claim the title of the largest IPO in Indian history. While Reliance Industries' Jio is also a candidate for a massive listing, it has yet to file its draft documents.

Maithan Alloys: The Smallcap Beneficiary

The market's enthusiasm for Maithan Alloys stems directly from its stake in the NSE. As one of India's leading ferroalloy manufacturers and exporters, the company holds 41,25,500 shares in the exchange, amounting to a 0.17% stake.

Based on the NSE's last traded price of ₹2,055 in the unlisted market prior to the DRHP filing, Maithan Alloys' holding is valued at roughly ₹850 crore. This massive asset value on its balance sheet acted as a catalyst for the stock, which recently hit an intraday high of ₹1,210 on the BSE, marking a one-week gain of nearly 25%.

Massive Gains for Institutional and PSU Investors

The NSE OFS is set to provide astronomical returns for several long-term institutional and public sector investors. State Bank of India (SBI) stands to be a primary beneficiary, with its investment poised to translate into an estimated gain of 256,775% based on its original acquisition cost.

Other notable beneficiaries include:

  • Insurance Giants: New India Assurance and National Insurance Company acquired shares at just 32 paise per share, potentially seeing returns of 6,422 times.
  • Stock Holding Corporation of India: Selling 11 million shares acquired at 46 paise, implying returns of about 4,467 times.
  • Foreign Investors: Temasek Holdings (via Aranda Investments) is looking at a 33x return, while Morgan Stanley expects roughly 31 times its investment.

While many are selling, the Life Insurance Corporation of India (LIC)—NSE's largest shareholder with an 11% stake—has chosen not to participate in the OFS, maintaining its position from its 1992 investment.

IPO Allocation Structure

According to the DRHP, the NSE IPO will follow a structured allocation: up to 50% of the issue is reserved for Qualified Institutional Buyers (QIBs), 35% for retail investors, and at least 15% for non-institutional investors.

Key Takeaways

  • Unprecedented IPO Size: The NSE IPO, estimated at ₹30,000 crore, is set to become India's largest public issue, surpassing Hyundai Motor India.
  • Maithan Alloys Rally: The smallcap firm saw a 24% weekly surge due to its 0.17% stake in NSE, valued at approximately ₹850 crore.
  • Extreme Multiplier Returns: Long-term holders like SBI and various PSU insurance companies are poised for massive gains, some exceeding several thousand times their initial investment.