Will NSEs Bonus Issue Help You Buy The Share Easily?

The National Stock Exchange's bonus announcement of four shares for every one share will improve liquidity in the over-the-counter market, but there are restrictions on the transferability of NSE shares. The NSE shares were trading in the range of Rs 4,000–4,500 per share in the OTC market, valuing the country's largest stock exchange in the range of Rs 1.92–2.2 lakh crore.

This valuation is based on the pre-bonus and pre-dividend share prices. Market sentiment views the bonus issue as a precursor to the anticipated approval for the initial public offering, which is currently stalled at the market regulator's end. The price of NSE shares will trade between Rs 800-900 ex-bonus.

One of the biggest hurdles to the free transferability of NSE shares is the restriction imposed by the stock exchange. Share transfers are a lengthy process that require board approval, which vets every buyer. This prevents easy transfers between investors and subjects all trades to approval from the exchange.

Financial Performance

The National Stock Exchange of India Ltd.'s profit rose by 12.9% over last year to $1 billion for the fiscal year ending March 2024. The world's largest derivatives exchange by trading volume for the fifth consecutive year achieved this milestone for the first time, according to the results announced for the fourth quarter of FY24.

During this fiscal, the NSE made an additional contribution of Rs 1,538 crore to the core settlement guarantee fund, bringing the total to Rs 8,818.9 crore.

On a quarterly basis, 46% of expenses on a standalone basis were attributed to SEBI regulatory fees, an additional contribution to the core SGF, and a contribution to the investor protection fund trust.

Segmental Performance

Average daily traded volumes, or ADTV, for the cash market segment doubled during the quarter compared to the year-ago period, crossing Rs 1 lakh crore for the first time. ADTVs for the cash market stood at Rs 1.11 lakh crore, rising by 1.27 times year-on-year.

In the equity futures segment, where the exchange holds a 99.9% market share, ADTVs grew by 60% year-on-year to reach Rs 1.79 lakh crore.

The equity options segment based on premium value increased by 27% year-on-year to Rs 75,572 crore for the quarter.

The exchange gained market share in the currency derivatives segment despite a reduction in volumes on both a quarterly and an annual basis, but lost a marginal market share in the equity derivatives segment after BSE derivative products gained some market share, even as volumes grew in both time frames.

Shareholders' Rewards Rise Ahead Of Long Awaited IPO

The board declared a record-high dividend for the year at 90 times the face value of a Re 1 share, along with a bonus of 4 additional shares for each share currently held.

It recommended a pre-bonus dividend of Rs 90 per share, resulting in a payout of Rs 4,455 crore—more than half of its FY24 profits.

The exchange has steadily increased the dividends paid, increasing the amount each year since FY18, when it paid Rs 14.75 per share.

(With inputs from Saloni Kothari)