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The National Commodities and Derivatives Exchange (NCDEX) has been buzzing for the last 2 weeks, as the NCDEX Unlisted Share has risen by 14% in 2 days and around 40% over the last week. This was following the hype and eventual investment in NCDEX by billionaire investors like R.K. Damani, HNIs Ramesh Damani, and Madhusudhan Kela have invested in the commodity exchange platform.
Rs 770 Crore Infused. Who Bought How Much?
NCDEX has raised a total of Rs 770 crores from a variety of investors. The major ones acquired their stake in the following ways:
Not just the above investors, but also global players like Kenneth Griffin led Citadel Securities, invested Rs 17 crore, while US US-based trading firm, Tower Research, invested Rs 34 crores in the exchange. Other investors like Kotak Mahindra Life Insurance and JM Financial also invested.
The Real Reason For These Investments
Over the last 3 decades, NCDEX was just a commodities exchange, helping investors trade in metals and agricultural products. But now, NCDEX is ambitiously planning to expand into equity and equity derivatives trading in the following ways:
Capital Expenditure: NCDEX requires sophisticated trading and clearing facilities, effective surveillance, and well-developed compliance mechanisms. All this requires a huge initial capital expenditure.
Technology and Human Capital: It has already been reported that NCDEX has initiated aggressive hiring, with a particular focus on technology jobs to enhance its core systems. It cannot afford to lose the race against NSE and BSE because of the necessity to build competitive digital platforms.
Roll-out Strategy in Phases: The exchange will initiate by rolling out cash equity products and thereafter with derivatives, ETF baskets, and even agri-infrastructure REITs. All phases of this rollout will entail serious financial support.
NCDEX Share Grows 50% In One Month, 14% In 2 Days
For the last month, there were strong signals of NCDEX raising a potential investment. This signal was given a green light with the recent Rs 770 crores funding, generating a lot of positive investor sentiment. NCDEX Unlisted Share, which was trading around Rs 320 per share in the first week of August 25 is now trading at Rs 483 in the first week of September 25, which is a 50% increase in just one month.
Is It The Right Time To Invest In NCDEX?
NCDEX’s current valuation has sparked mixed opinions in the market. While there are concerns that it may be on the higher side, the backing of prominent investors such as R.K. Damani, Groww, and Zerodha indicates confidence in the exchange’s long-term growth prospects. The valuation, therefore, can be seen as reflecting both optimism about future expansion and the usual risks associated with pricing in ambitious growth.
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