BSE's IPO Plans: How a few exchanges fared after listing

Deepak Kumarmoneycontrol.comOver the last three fiscal years, Bombay Stock Exchange has seen its profits shrink. In FY16, its consolidated profit was down 38 percent at Rs 96 crore from the year before.

BSE has seen its volumes tumble to Rs 22.49 crore in April 2016 from Rs 27.59 crore from the year-ago period. The daily average traded quantity on the stock exchange was Rs 28-30 crore. 

Recently, Asia’s oldest stock exchange announced it will be hitting the primary market with an initial share sale. It has set the date for the public issue in December.

But will the initial public offer help revive its profits and give the bourse a new lease of life?  This question can be answered — at least partially — by looking at the first earnings reports of a few stock exchanges immediately after they got listed.

We randomly selected five stock exchanges that were listed from 1998 onwards till 2013. The mix has two Asian, one European, one American, and one Australian stock exchanges.

A rough comparison of net profit figures of these stock exchanges immediately prior to their listing reveal three of them posted greater profits after their IPOs.

For example, one of the earliest stock exchanges to get listed was the Australian Securities Exchange in November 1998. The company saw its net profits rise by an unprecedented 126 percent when it reported results after its IPO

Other bourses like the Japan Exchange Group also saw net profits shoot up by 10 percent.

So, how do you think the BSE will fare after its IPO, in the light of the above findings? It is anybody’s guess. Crystal-ball gazing is welcome.Source: Company earnings reports.