Why India's Superstar Investors are Refusing to Sell NSE Shares

As the National Stock Exchange (NSE) prepares for India's largest-ever initial public offering, a fascinating divide has emerged among its shareholders. While massive institutions like SBI prepare to book astronomical profits, a group of India's most legendary individual investors have decided to hold their positions instead of participating in the offer for sale.

The High-Stakes Holdouts: Damani, Agrawal, and Khanna

While the NSE IPO is structured entirely as an offer for sale (OFS) of approximately 148.9 million shares, several "superstar" investors are choosing long-term capital appreciation over immediate liquidity.

Leading this group is retail tycoon Radhakishan Damani. Holding roughly 3.9 crore shares (a 1.58% stake), Damani’s position is valued at approximately Rs 8,032 crore based on last unlisted market trades of Rs 2,055 per share. This single holding is worth more than what several exiting institutional investors are expected to realize combined.

Other notable individual investors opting out include:

  • Sunil Kant Munjal (Hero Group): Holds 1.02 crore shares worth ~Rs 2,040 crore.
  • S. Gopalakrishnan (Infosys Co-founder): Holds 94.29 lakh shares worth ~Rs 1,886 crore.
  • Ignatius Navil Noronha (Dmart CEO): Holds 30 lakh shares worth ~Rs 600 crore.
  • Dolly Khanna: The smallcap specialist holds 15.16 lakh shares worth ~Rs 311 crore.
  • Raamdeo Agrawal & Motilal Oswal: Both veteran value investors are holding 8 lakh shares each, valued at roughly Rs 164 crore each.

Even the Life Insurance Corporation of India (LIC), the exchange's largest shareholder with an 11% stake, has declined to participate in the OFS, opting to retain its position intact.

The Great Exit: Institutional Windfalls

The decision to "sit out" stands in stark contrast to the massive profits being realized by public-sector institutions. For many, the NSE IPO represents a once-in-a-lifetime jackpot.

State Bank of India (SBI) is selling 2.47 crore shares, aiming for a staggering 256,775% profit on its original investment. Similarly, public insurers New India Assurance and National Insurance—who originally acquired shares at just 32 paise—are looking at returns of up to 6,422 times. Overseas giants like Temasek and Morgan Stanley are also exiting, eyeing returns in the range of 31x to 33x.

Valuation and IPO Scale

The proposed Rs 30,000 crore issue is set to eclipse the record held by Hyundai Motor India. At an indicative price of Rs 2,000 per share, the NSE would be valued at approximately Rs 5 lakh crore ($52 billion).

Interestingly, despite its dominant market share, NSE's projected valuation appears conservative compared to its rival. At these levels, NSE would trade at a price-to-earnings (P/E) ratio of 49, whereas its smaller competitor, BSE, trades at a P/E of over 66. Under the DRHP, the issue allocation is set at 50% for qualified institutional buyers, 35% for retail investors, and 15% for non-institutional bidders.

Key Takeaways

  • Strategic Holding: Top-tier investors like Radhakishan Damani and LIC are bypassing the IPO to maintain long-term ownership in India's dominant exchange.
  • Unprecedented Returns: Institutional exits like SBI and New India Assurance are seeing massive multi-thousand-fold returns on their initial capital.
  • Market Landmark: With a target of Rs 30,000 crore, the NSE IPO is poised to become India's largest-ever listing, valued at roughly Rs 5 lakh crore.