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Wednesday, 13 January 2016 01:38

Here's an interesting IPO idea for you

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The Bombay Stock Exchange (BSE) is the 11th largest stock exchange in the world. It is also the first stock exchange of Asia.

The listing of BSE was delayed due to the integration of the FMC with SEBI and due to regulations for listing of Stock Exchanges. Towards the end of 2015, the SEBI gave permission to the stock exchanges to go ahead with listing.

In March 2016, the SEBI has given an in-principle go ahead to BSE for listing its shares on another stock exchange.

The shares of BSE Ltd are currently being traded in the unlisted shares' secondary market around Rs 340/ share.

Investing in BSE shares can be an excellent long term bet due to the following reasons:

•    The market capitalization of the stock exchange is over USD 1.6 trillion.
•    There are only two major players in the market - BSE and NSE.
•    There are huge entry barriers so threat of new entrants is very low.
•    The market size is expected to grow significantly due to the growing GDP, and increased market participation.

The company's financial performance is robust; following are the financial highlights for the year ending 31st March 2015:

#Earning per share (EPS): Rs 14
#Book Value per share: Rs 247.5

To know more about the company's financials, please click here

Financial services businesses like the BSE are generally valued around 2 times their book value. The shares of BSE Ltd are currently being traded in the unlisted shares' secondary market around Rs.340/ share.

This means that the stock is currently trading at around 24.2 times its FY15 earnings and is trading just 1.37 times its FY15 BV/share.

The nearest comparable listed and unlisted exchanges are trading over 3 times their respective Book Value. For a market leader in an industry with high growth & high entry barriers; these seem to be extremely low multiples.

This article is contributed by Altaf Siddiqui, MD & CEO, Enrich Advisors Pvt. Ltd. For more IPO investment ideas follow @PreIPOequity on Twitter. 


Read 345536 times Last modified on Wednesday, 21 December 2016 15:24
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