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Time of India
09-07-2025
- Business
- Time of India
China's rare earth chokehold may open some doors for India
India is poised for an industrial shift as rare earth elements and critical minerals gain prominence amid a strategic push for self-reliance and reduced dependence on appears to be on the verge of a significant industrial transformation, with rare earth elements (REEs) and other critical minerals taking centre stage. The nation's strategic push towards self-reliance, spurred by geopolitical tensions and China's near-monopoly on rare earths, presents a compelling opportunity for investors. The effort aims to leverage India's substantial natural resources to support its growing electric vehicle (EV), renewable energy and defence sectors. The geopolitical crucible The global rare earth market, heavily dominated by China, has come under intense scrutiny due to export restrictions and trade disputes. According to CNBC, China controls an estimated 90% of the global rare earth magnet market. This dominance was highlight in April 2025 when China tightened export licensing for critical REEs like terbium and dysprosium, elements essential to Neodymium-Iron-Boron (NdFeB) magnets used in EV motors, wind turbines and defence systems. Notably, while China remains the dominant player, its share of global rare earth mining is projected to decline to 51%, and refining to 76% by 2030, as global supply chains diversify, according to a report by CareEdge Global. As Amit Gupta, Executive Group Vice President at Motilal Oswal Private Wealth, told ET Now, the recent geopolitical crises are catalysing the emergence of new sectors in Indian markets. Gupta notes that while India previously stayed away from rare earth mining due to environmental concerns, the global scenario now positions India, home to 8% of the world's rare earth reserves, as a key player. 'Rare earth is coming as that kind of opportunity... the reserves are almost 250 times higher than what is being mined now,' Gupta says. This shift is encouraging countries to diversify rare earth supply chains, creating strategic openings for resource-rich nations like India. India's untapped potential Although China holds the largest REE deposits at 44 million tonnes, India's 6.9 million tonnes give it the third-largest share globally, according to the U.S. Geological Survey. India also possesses about 35% of the world's beach and sand mineral deposits, as per an EY report. These reserves are especially significant for high-performance applications in EVs, electronics, and defence. Gracelin Baskaran, Director of the Critical Minerals Security Program at CSIS, told CNBC that India is "poised to play a key role in building a more diversified global rare earths supply chain." However, despite its endowment, India's output has remained low, just 2,900 tonnes annually from 2012 to 2024, per Statista. CNBC, citing Abhijit Kulkarni of EY Parthenon, attributes this gap to limited refining technologies, insufficient technical expertise, and inadequate mining infrastructure. Baskaran notes that while India cannot displace China, it can certainly serve as a vital alternate source of supply. To address these limitations, CNBC-TV18 reports that the government is exploring partnerships between IREL (India) Ltd. and the private sector, alongside incentives and capital subsidies to enhance domestic mining and processing. Regulatory and institutional challenges India's rare earth resources are primarily found in monazite-rich coastal deposits in Andhra Pradesh, Odisha, Tamil Nadu, Kerala, and West Bengal, with smaller reserves in Jharkhand, Gujarat, and Maharashtra, according to the Financial Express. Despite institutional support from Indian Rare Earths Limited (IREL), the end-to-end value chain, from extraction to magnet manufacturing, remains underdeveloped. The Atomic Energy Act, 1962, which designates monazite as a "prescribed substance" due to its thorium content, reserves mining of these minerals for public sector entities. This legal framework has historically excluded private participation, limiting scaling opportunities. India must now evolve beyond producing REE oxides to manufacturing value-added products like rare earth metals. This requires focused R&D, global collaborations and specialised industrial zones. Strategic global partnerships India is strengthening international collaborations to build more resilient rare earth supply chains, with Australia emerging as a key strategic partner. As the world's fourth-largest producer of rare earth elements (REEs), Australia plays a central role in this effort. Under the India–Australia Critical Minerals Investment Partnership, established through a Memorandum of Understanding (MoU) signed in March 2022 between Khanij Bidesh India Ltd (KABIL) and Australia's Critical Minerals Facilitation Office, India is exploring investments in Australian rare earth projects, according to the Press Information Bureau ( PIB ). According to a July 9 report by The Economic Times, India is actively in discussions with Australia to secure access to rare earth minerals , amid a global shortage of rare earth magnets triggered by China's tightening of export controls. 'They [India and Australia] are talking about rare earth, and there are blocks available,' said Malini Dutt, Trade and Investment Commissioner for the New South Wales Government in Australia. 'So there is an opportunity for India to take an early-stage block and have tie-ups with a few companies.' In addition, the CSIRO-led India–Australia Critical Minerals Research Partnership, funded through 2026, supports joint research and development across the entire value chain, from exploration and processing to recycling. These initiatives are further reinforced by the broader India–Australia Comprehensive Strategic Partnership and the Quad's minerals cooperation framework. Lessons from Japan Japan's experience following China's 2010 export halt offers valuable insights. The embargo, stemming from a territorial dispute, disrupted Japan's manufacturing sector. In response, Japan invested in Australia's Lynas Rare Earths via the Japan Australia Rare Earths (JARE) joint venture, securing $450 million in funding over the years. This strategic move helped Japan reduce its dependence on Chinese REEs from over 90% to around 58% by 2022, as per Quartz. India can learn from this state-led, targeted approach to supply chain diversification. National Critical Mineral Mission (NCMM) In 2025, India launched the National Critical Mineral Mission (NCMM), according to PIB. The mission aims to bolster self-reliance in critical minerals through exploration, mining, processing, and recycling. The Geological Survey of India (GSI) will conduct 1,200 exploration projects by 2030-31. Efforts include auctions for 100+ mineral blocks, exploration of offshore polymetallic nodules, and relaxed rules to enable mineral recovery from secondary sources like fly ash and red mud. A fast-track approval mechanism and a new Exploration Licence are also being introduced. A Centre of Excellence on Critical Minerals (CECM) is proposed to guide policy and keep the critical minerals list updated. IREL's expanding role IREL (India) Ltd., under the Department of Atomic Energy, holds a near-monopoly on India's REE mining and processing. It achieved a record production of 531,000 tonnes in FY24, as per Outlook Business. The Rare Earth Extraction Plant in Odisha saw a 9.8% increase in chemical output. IREL has begun manufacturing rare earth magnets and metals at its Visakhapatnam and Bhopal facilities. These are being tested by BARC and DMRL, as reported by Financial Express. The company also plans to supply around 500 tonnes of raw materials to OEMs. To diversify supply chains, IREL is scouting for REE resources in Oman, Vietnam, Sri Lanka, and Bangladesh, per Times of India . However, expansion has been hampered by delays in mining permits and environmental clearances, along with CRZ guidelines. Overseas acquisitions Through KABIL, a joint venture of three PSUs, India is acquiring overseas mineral assets. Prime Minister Narendra Modi's visits to Argentina and Brazil, part of the lithium-rich ' Triangle ,' underscore this push. Key initiatives: On January 15, 2024, KABIL signed an agreement with Argentina's CAMYEN SE for lithium exploration over 15,703 hectares. In March 2022, KABIL signed an MoU with Australia's Critical Mineral Office. Due diligence is underway for lithium and cobalt projects in Australia. Downstream opportunities While direct mining of radioactive REEs remains a PSU domain, private companies are increasingly eyeing downstream activities like magnet manufacturing. The Mines and Minerals (Development and Regulation) Act, 2023, now permits private exploration of non-radioactive rare earths. According to Economic Times, 13 acreages have already been auctioned. India's domestic rare earth magnet demand surged from 12,400 tonnes in FY21 to nearly 54,000 tonnes in FY25. The market is projected to hit USD 993 million by 2033. To support this, the government is finalising a Rs 3,500–Rs 5,000 crore Production-Linked Incentive (PLI) scheme. An initial Rs 1,000 crore outlay aims to boost domestic magnet production to 1,500 tonnes. Notable private players include: Sona Comstar plans to begin magnet production by end-2025 (ET). Vedanta and Hindustan Zinc are exploring serious entry into this space, driven by demand from EVs and defence sectors (Outlook Business, July 1, 2025). Midwest Advanced Materials Pvt Ltd, Hyderabad, has received Ministry of Science and Technology support for local magnet production (Times of India, June 21, 2025). Challenges and future strategy Despite momentum, challenges remain. Legal restrictions from the Atomic Energy Act, 1962, limit the role of private entities in mining radioactive REEs. Moreover, many of India's reserves are lean and complex to extract. The economics are also challenging, though imports rose 88% to 53,700 tonnes in FY25, their value increased just 5% to Rs 1,744 crore, as per Times of India. Beyond rare earths India's ambition extends to a wider basket of critical minerals. The NCMM identifies 30 critical minerals, including lithium, cobalt and nickel, essential for EV batteries and clean energy. The EV market is projected to hit 6.3 million units by 2027, with wind energy capacity rising from 42 GW to 140 GW by 2030 (ET). According to PIB, India aims to reduce its GDP's emissions intensity by 45% by 2030 (from 2005 levels), achieve 50% electric power capacity from non-fossil sources by 2030, and reach net-zero emissions by 2070.
Economic Times
09-07-2025
- Business
- Economic Times
China's rare earth chokehold may open some doors for India
Synopsis India is strategically positioning itself as a key player in the rare earth elements (REE) market, aiming for self-reliance amidst geopolitical tensions and China's dominance. With substantial reserves and government initiatives like the National Critical Mineral Mission, India is fostering domestic mining, processing, and magnet manufacturing. TIL Creatives This is an AI-generated image used for representation purposes. India appears to be on the verge of a significant industrial transformation, with rare earth elements (REEs) and other critical minerals taking centre stage. The nation's strategic push towards self-reliance, spurred by geopolitical tensions and China's near-monopoly on rare earths, presents a compelling opportunity for effort aims to leverage India's substantial natural resources to support its growing electric vehicle (EV), renewable energy and defence sectors. The global rare earth market, heavily dominated by China, has come under intense scrutiny due to export restrictions and trade disputes. According to CNBC, China controls an estimated 90% of the global rare earth magnet market. This dominance was highlight in April 2025 when China tightened export licensing for critical REEs like terbium and dysprosium, elements essential to Neodymium-Iron-Boron (NdFeB) magnets used in EV motors, wind turbines and defence while China remains the dominant player, its share of global rare earth mining is projected to decline to 51%, and refining to 76% by 2030, as global supply chains diversify, according to a report by CareEdge Amit Gupta, Executive Group Vice President at Motilal Oswal Private Wealth, told ET Now, the recent geopolitical crises are catalysing the emergence of new sectors in Indian markets. Also Read: Rare earth, copper mining: What lies in store for India investors? Amit Gupta explains Gupta notes that while India previously stayed away from rare earth mining due to environmental concerns, the global scenario now positions India, home to 8% of the world's rare earth reserves, as a key player.'Rare earth is coming as that kind of opportunity... the reserves are almost 250 times higher than what is being mined now,' Gupta shift is encouraging countries to diversify rare earth supply chains, creating strategic openings for resource-rich nations like China holds the largest REE deposits at 44 million tonnes, India's 6.9 million tonnes give it the third-largest share globally, according to the U.S. Geological Survey. India also possesses about 35% of the world's beach and sand mineral deposits, as per an EY report. These reserves are especially significant for high-performance applications in EVs, electronics, and Baskaran, Director of the Critical Minerals Security Program at CSIS, told CNBC that India is "poised to play a key role in building a more diversified global rare earths supply chain." However, despite its endowment, India's output has remained low, just 2,900 tonnes annually from 2012 to 2024, per citing Abhijit Kulkarni of EY Parthenon, attributes this gap to limited refining technologies, insufficient technical expertise, and inadequate mining infrastructure. Baskaran notes that while India cannot displace China, it can certainly serve as a vital alternate source of address these limitations, CNBC-TV18 reports that the government is exploring partnerships between IREL (India) Ltd. and the private sector, alongside incentives and capital subsidies to enhance domestic mining and rare earth resources are primarily found in monazite-rich coastal deposits in Andhra Pradesh, Odisha, Tamil Nadu, Kerala, and West Bengal, with smaller reserves in Jharkhand, Gujarat, and Maharashtra, according to the Financial Express. Despite institutional support from Indian Rare Earths Limited (IREL), the end-to-end value chain, from extraction to magnet manufacturing, remains Atomic Energy Act, 1962, which designates monazite as a "prescribed substance" due to its thorium content, reserves mining of these minerals for public sector entities. This legal framework has historically excluded private participation, limiting scaling must now evolve beyond producing REE oxides to manufacturing value-added products like rare earth metals. This requires focused R&D, global collaborations and specialised industrial is strengthening international collaborations to build more resilient rare earth supply chains, with Australia emerging as a key strategic partner. As the world's fourth-largest producer of rare earth elements (REEs), Australia plays a central role in this effort. Under the India–Australia Critical Minerals Investment Partnership, established through a Memorandum of Understanding (MoU) signed in March 2022 between Khanij Bidesh India Ltd (KABIL) and Australia's Critical Minerals Facilitation Office, India is exploring investments in Australian rare earth projects, according to the Press Information Bureau (PIB).According to a July 9 report by The Economic Times, India is actively in discussions with Australia to secure access to rare earth minerals, amid a global shortage of rare earth magnets triggered by China's tightening of export controls.'They [India and Australia] are talking about rare earth, and there are blocks available,' said Malini Dutt, Trade and Investment Commissioner for the New South Wales Government in Australia. 'So there is an opportunity for India to take an early-stage block and have tie-ups with a few companies.'In addition, the CSIRO-led India–Australia Critical Minerals Research Partnership, funded through 2026, supports joint research and development across the entire value chain, from exploration and processing to recycling. These initiatives are further reinforced by the broader India–Australia Comprehensive Strategic Partnership and the Quad's minerals cooperation experience following China's 2010 export halt offers valuable insights. The embargo, stemming from a territorial dispute, disrupted Japan's manufacturing sector. In response, Japan invested in Australia's Lynas Rare Earths via the Japan Australia Rare Earths (JARE) joint venture, securing $450 million in funding over the strategic move helped Japan reduce its dependence on Chinese REEs from over 90% to around 58% by 2022, as per Quartz. India can learn from this state-led, targeted approach to supply chain 2025, India launched the National Critical Mineral Mission (NCMM), according to PIB. The mission aims to bolster self-reliance in critical minerals through exploration, mining, processing, and recycling. The Geological Survey of India (GSI) will conduct 1,200 exploration projects by include auctions for 100+ mineral blocks, exploration of offshore polymetallic nodules, and relaxed rules to enable mineral recovery from secondary sources like fly ash and red mud. A fast-track approval mechanism and a new Exploration Licence are also being introduced.A Centre of Excellence on Critical Minerals (CECM) is proposed to guide policy and keep the critical minerals list (India) Ltd., under the Department of Atomic Energy, holds a near-monopoly on India's REE mining and processing. It achieved a record production of 531,000 tonnes in FY24, as per Outlook Business. The Rare Earth Extraction Plant in Odisha saw a 9.8% increase in chemical has begun manufacturing rare earth magnets and metals at its Visakhapatnam and Bhopal facilities. These are being tested by BARC and DMRL, as reported by Financial Express. The company also plans to supply around 500 tonnes of raw materials to diversify supply chains, IREL is scouting for REE resources in Oman, Vietnam, Sri Lanka, and Bangladesh, per Times of India. However, expansion has been hampered by delays in mining permits and environmental clearances, along with CRZ KABIL, a joint venture of three PSUs, India is acquiring overseas mineral assets. Prime Minister Narendra Modi's visits to Argentina and Brazil, part of the lithium-rich 'Triangle,' underscore this push. Key initiatives: On January 15, 2024, KABIL signed an agreement with Argentina's CAMYEN SE for lithium exploration over 15,703 March 2022, KABIL signed an MoU with Australia's Critical Mineral diligence is underway for lithium and cobalt projects in direct mining of radioactive REEs remains a PSU domain, private companies are increasingly eyeing downstream activities like magnet manufacturing. The Mines and Minerals (Development and Regulation) Act, 2023, now permits private exploration of non-radioactive rare to Economic Times, 13 acreages have already been auctioned. India's domestic rare earth magnet demand surged from 12,400 tonnes in FY21 to nearly 54,000 tonnes in FY25. The market is projected to hit USD 993 million by support this, the government is finalising a Rs 3,500–Rs 5,000 crore Production-Linked Incentive (PLI) scheme. An initial Rs 1,000 crore outlay aims to boost domestic magnet production to 1,500 tonnes. Notable private players include: Sona Comstar plans to begin magnet production by end-2025 (ET).Vedanta and Hindustan Zinc are exploring serious entry into this space, driven by demand from EVs and defence sectors (Outlook Business, July 1, 2025).Midwest Advanced Materials Pvt Ltd, Hyderabad, has received Ministry of Science and Technology support for local magnet production (Times of India, June 21, 2025).Despite momentum, challenges remain. Legal restrictions from the Atomic Energy Act, 1962, limit the role of private entities in mining radioactive REEs. Moreover, many of India's reserves are lean and complex to extract. The economics are also challenging, though imports rose 88% to 53,700 tonnes in FY25, their value increased just 5% to Rs 1,744 crore, as per Times of ambition extends to a wider basket of critical minerals. The NCMM identifies 30 critical minerals, including lithium, cobalt and nickel, essential for EV batteries and clean energy. The EV market is projected to hit 6.3 million units by 2027, with wind energy capacity rising from 42 GW to 140 GW by 2030 (ET).According to PIB, India aims to reduce its GDP's emissions intensity by 45% by 2030 (from 2005 levels), achieve 50% electric power capacity from non-fossil sources by 2030, and reach net-zero emissions by 2070.
Economic Times
07-07-2025
- Business
- Economic Times
Rare earth, copper mining: What lies in store for India investors? Amit Gupta explains
Amit Gupta, Executive Group Vice President, Motilal Oswal Private Wealth, says the ongoing geopolitical crisis is creating new opportunities for Indian markets. Focus is shifting to sectors like semiconductors and rare earth elements. India holds significant rare earth reserves, especially heavy rare earths used in EVs and defense. Copper mining also presents an opportunity as prices rise. Government initiatives aim to boost AC exports, creating potential in the consumer discretionary sector. ADVERTISEMENT What is your market view and where do you think we stand right now? Amit Gupta: If you look at this way, we had made a previous base of around 18,000 when the Ukraine war started and the US banks were collapsing in February, March 2023. We made the final bottom around 18,000 and the market started moving up. That means we spent almost two to two-and-a-half years over there. This particular consolidation started when in the 2024 general election, we did not see the expected quantum of votes going to the ruling party and the capex story got derailed last year from June onwards though the market made the top at around 26,000 later. Almost a year has passed since then. After the recent India-Pakistan conflict, the central government positioning looks much better and they have upfronted the capex. I understand the March capex because we did not do that kind of capex in the beginning because of state elections. Last year, we had Rs 99,000 crore of capex; this financial year, we started with Rs 1,59,000 crore. That shows the intensity. It is getting frontloaded and that is why those sectors can start performing. Overall, market valuations are around 20 times now, considering FY27, because we closed at 1038. If you consider 12% growth in earnings and then 10% growth in FY27, the number comes at around 1278. So, it is around 20 times. This is a fine balancing number. On some days, when the market will be under pressure, it can go down to 19, 19.5, but beyond that, we are not expecting the valuations to come down because a number of consumer names have entered in the index in the last four-five years and that is why it will remain in that particular zone and we have to be more stock, sector specific. What is your view on valuations considering that everybody is saying that Indian markets are richly priced? Amit Gupta: Compared to other markets, the Indian market is relatively higher. But we also need to understand that our weight in MSCI has increased to almost 18-19% and the dollar is weakening. So, support from foreign institutions can come to Indian markets. Along with this, we also understand that we were growing with 20% of earnings growth for two-three years, but now that growth is not coming. So, more consolidation is possible here. We can see the consolidation within 1,000, 2,000 points of the index. ADVERTISEMENT There are certain heavyweights in the index which are attractively valued, which have not participated. It may be a time for them to support the market and the actual move will happen in the broader market. There are categories which are beneficiary of the FTA agreements which we are signing with the UK, and maybe with the EU. All these and the kind of deal happening with the US is going to have sector-specific impact. We feel markets will be consolidating more because next year, 12% earnings growth is expected. Within that range we should expect more move in the Nifty 50 stocks. But I wanted to understand whether you have gone through what the Trent updates have been and how you are reading into the management's weak commentary. Downgrades also are coming in. Do you sense that there will be some more EPS pressure? Amit Gupta: I cannot be stock specific, but what I am seeing is that if the companies are growing at 35% for a particular period, the kind of things they do in the lifestyle business, what this company has done, a time comes when you do not go with the same kind of growth. If that growth comes down to 30% or 25%, it is still a better growth but your valuations moved much higher. ADVERTISEMENT When you were growing at 35%, that means you were expecting that within two years, it will be doubled and when you are growing at 25%, you are expecting it to be doubled in three years. So, this one-year extension obviously will lead to the derating and the price to earning will start coming down as it consolidates. It will align itself with the market also. If you look at Nifty, which may also consolidate for one or two quarters and eventually will look more attractive, when we look at Trent or these kinds of stocks over the period, they will be relatively some time has to be spent here, the market will understand that 25% growth is okay but in Bajaj Finance and those kinds of companies which were consolidating for long and growing much faster before, that did not happen any more. ADVERTISEMENT Marico is saying that the India business volume growth has now reached multi-quarter highs and that core franchises, new businesses, rural growth is aiding their growth. Could one see similar commentary from the other rural focused FMCG players as well? Amit Gupta: This is very interesting, because we had two years of negative rural growth and now we are bouncing back from there. There is always a mean reversion from such kinds of things. Now, we are seeing 0.8% of growth in the rural story. Some names will come on the surface because they have not participated for a long period. But if you are looking for a much higher growth, then you have to look beyond also, because there are certain disruptions that have happened on the consumer side. With the emergence of aggregators or platform companies, it is a challenge to give that kind of volume growth which we are clearly seeing in the FMCG not coming. FMCG profit margins maybe 19%, but the volume growth is very low. So, it can pick up. A technical bounce can definitely come, but ultimately, we also need to understand that sales growth is going somewhere else. The platforms, internet, the use of internet, smartphones, are leading to that kind of change that companies need to understand. So, there are more players, more products and maybe better pricing over there. The consumers have more options and this kind of disruption can't be stopped. Now companies have to align themselves with these kinds of players and then the growth alignment can come. ADVERTISEMENT But amidst this whole tariff war that we have seen with respect to the US and China, one of the other spaces where all the global economies were caught red-handed was over dependence on China with respect to the rare earth magnet issue. How do you see this particular shortage impacting the industries? In India there are so many companies wanting to explore this field. As an investor do you believe that there is any way that investors can play this theme? Amit Gupta: Yes, the geopolitical crisis that is happening in the last two-three years is leading to the emergence of many sectors in Indian markets. It is not that it is always negative. When the Ukraine war started, we never thought of the chips which can be used in many sectors, in many applications. Finally, we started working on the PLI on semiconductors. We saw the move in those kindd of stocks even though the plants are not commissioned. Rare earth is coming as that kind of opportunity. Most of the things are done in China. But if you look at the total mining fields, the reserves are almost 250 times higher than what is being mined now. We did not get into that maybe because of pollution issues also, but that is an opportunity now in India because India has 8% of global reserves in rare earth and we were more aligned with the light part of rare earth which may have a lesser magnetic field. The time has come to look at the rare earths with a strong magnetic field. So, heavy rare earths and that is where some companies are coming now. We have already seen an announcement from a PSU. They have aligned 2,000 crores plus funds for this. Rare earth is used in EVs, electronics, defence. It is used in missiles and radars among others. We are pushing defence and electronics items for exports. So, it is a good opportunity. There are companies which are in copper mining also. Copper prices are again making new highs. If we combine this opportunity of critical minerals with copper, there will be opportunities in the market which are available at a better valuation as well. The market can consolidate, it can decline and we will find emerging sectors. That is how FY 26 has to be played. Can one bet on copper as a commodity? What is your overall sense of the metal pack? Amit Gupta: That was in deficit, We were expecting power demand. Earlier, the market was expecting a 9% increase in demand. It did not happen. It is around 6% right now because the monsoon also came before time. Eventually, when we are going more for artificial intelligence and data centres, we will see multiple times increase in power demand. That is where copper also comes in. Copper is used in wires and cables and that is where it can impact some of the segments like consumer durables, air conditioners where copper is used. Obviously, the producers will be beneficiaries, the users may come under pressure. In India, air conditioners use copper compressors. There are players who are acting as vendors and manufacturing ACs for all the players. Our view is OEMs can remain under pressure because there is a continuous Japanese pressure. They are not able to get one-fourth of the market share also. The government has said that 1.4 crore ACs are sold in India every year. In the coming four years, we have to start exporting 1.4 crore ACs. So, there is another push in the consumer discretionary side after mobile phones that is going to come in the Indian market. So, opportunities are there.
Economic Times
01-07-2025
- Business
- Economic Times
NSE IPO: Sebi nod to file DRHP likely this month, listing expected in Q4, says Motilal
The National Stock Exchange of India (NSE) may receive a go-ahead from the Securities and Exchange Board of India (Sebi) to file its Draft Red Herring Prospectus (DRHP) by the end of July 2025, paving the way for a highly anticipated stock market listing by the fourth quarter of the current financial year, according to Motilal Oswal Private Wealth. ADVERTISEMENT The financial services firm noted that the clearance to file the DRHP is likely to follow a 'proposed settlement to resolve the long-standing co-location and dark fiber disputes.' Once Sebi issues a no-objection certificate, the exchange is expected to take four to five months to prepare its DRHP, followed by another two to three months of regulatory scrutiny, Motilal Oswal Private Wealth said. If all goes smoothly, NSE could be listed on the BSE in Q4 FY2026. This projected timeline aligns with recent remarks from Sebi Chairman Tuhin Kanta Pandey, who said on June 21 that there is 'no obstacle' that remains in the way of the NSE IPO. Speaking at the FE CFO Awards, Pandey made it clear that the exchange had cleared the final regulatory hurdles, marking a turning point in the long-delayed listing process. Sebi's decision to shelve earlier proposals aimed at separating clearing corporations from stock exchanges removed a major roadblock. The regulator is now reportedly comfortable with the existing ownership structure and is not pressing for structural separation—a sticking point that had held back the IPO for had also acknowledged that while certain legal and financial settlements were still in process, these were not expected to be deal-breakers. NSE has already paid Rs 640 crore to Sebi in October 2024 to settle an older case, and a broader proposal reportedly involving Rs 1,000 crore has been floated to resolve other legacy matters. ADVERTISEMENT The listing would mark the culmination of a nearly decade-long journey for NSE, which first filed draft IPO papers in 2016 to raise around Rs 10,000 crore through a 22% stake sale by existing shareholders. Since then, regulatory scrutiny and unresolved disputes have kept India's largest stock exchange from going public, even as its unlisted shares remained hot property in the grey market. In a key recent move, NSE removed the ISIN freeze from March 24, 2025, allowing investors to trade its shares freely like other unlisted shares. This change has significantly improved liquidity in the private market and reduced the share transfer approval process from three months to just a day, according to Motilal Oswal. ADVERTISEMENT Backed by dominant market share and robust financial performance, NSE appears to be listing at a position of strength. The exchange commands a 94% share in cash equities, 99% in equity index futures, and 88% in equity index options premium. ADVERTISEMENT The NSE reported a 17% year-on-year rise in total income to Rs 19,177 crore in FY25, with revenue from operations growing 16% to Rs 17,141 crore. Net profit surged 47% to Rs 12,188 crore, reflecting 'strong operational performance and strategic initiatives undertaken by the exchange,' the financial services firm EBITDA margin stood at 74% for FY25, while return on equity hit 45%. In Q4 FY25, the exchange posted a net profit of Rs 2,650 crore despite a revenue drop of 18% from the year-ago period, due to volume declines in the cash and derivatives markets. NSE declared a dividend of Rs 35 per share, including a special one-time payout of Rs 11.46. ADVERTISEMENT The financial services firm also pointed to the relatively low retail participation in Indian equity markets, estimated at just 3–4, as a major opportunity for future growth. 'Even a modest increase in this percentage would translate into substantial gains for NSE,' Motilal Oswal regulatory tightening around F&O trading has led to more stable volumes, with average daily turnover in options rising from Rs 479 billion in February 2025 to Rs 582 billion in April 2025. The shift to higher-ticket, non-expiry contracts and improved premium ratios have helped soften the topline impact, and margins may improve further with lower clearing costs and Sebi an estimated market capitalisation of nearly Rs 5.94 lakh crore based on current unlisted share prices of Rs 2,400 apiece, NSE's IPO could be one of the largest in Indian capital market the Sebi chairman's public assurance and a clear settlement path emerging, the exchange's long-awaited public debut now appears to be not a question of if, but when. Also read | NSE IPO clears final regulatory hurdles, as SEBI Chief Tuhin Kanta Pandey says no obstacle remains (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Hans India
21-06-2025
- Business
- Hans India
Strong demand, stable activity in economy
India's economic indicators are becoming more supportive of growth, according to the report released by Motilal Oswal Private Wealth (MOPW) on Friday. The report highlights that several positive trends are emerging on the domestic front, including higher GDP growth, easing inflation, and strong tax GDP grew by 7.4 per cent in the fourth quarter of FY25, which is the highest reading in the last four has remained below 4 per cent for four consecutive months, and GST collections have been rising steadily. These signs indicate strong demand and stable activity in the formal sector of the report also notes that India's policy environment is now moving in a unified direction. Fiscal, monetary, and regulatory policies are all aimed at maintaining growth increased tax exemption limits that came into effect from April 2025 are expected to improve disposable incomes and boost the same time, the government's capital expenditure continues to rise, supporting the investment the global front, the environment remains mixed. In April and May, markets faced worries over tariffs and geopolitical tensions. However, the situation improved with a delay in global tariff implementation and a ceasefire announcement between India and Pakistan. This improved global sentiment has helped global equity markets, with the MSCI World Index reaching record highs. Meanwhile, rising bond yields in Japan and China's shift towards gold show that global investors are moving away from US could become a concern as the US faces refinancing of $9 trillion in debt this a weaker Dollar Index could help emerging markets like India by attracting more foreign investments. In the Indian stock market, valuations have increased as earnings have not grown at the same Nifty-50's one-year forward valuation has risen above its long-term average, and mid and small-cap stocks continue to trade at a premium. This makes careful stock selection and active management more important for investors looking to generate higher returns, the report stated.
