NSE IPO Review Note: subscribe this IPO for Long Term

Report by: Raj Gaikar, Equity Research Analyst, SAMCO Securities

MUMBAI, 12 SEPTEMBER: National Stock Exchange of India Limited was incorporated on November 27, 1992 and operates from Exchange Plaza, Bandra Kurla Complex, Mumbai. It has been the largest stock exchange in India by total turnover in the cash market and by total turnover in equity derivatives, measured on notional turnover for equity options, from Fiscal 2001 through Fiscal 2026 and the three months ended June 30, 2026, and the largest by total turnover in exchange-traded currency derivatives from Fiscal 2009 over the same span, according to the Redseer Report. It is a first level regulator under the SEBI circular on charges levied by Market Infrastructure Institutions dated July 1, 2024, combining the trading platform with surveillance, issuer oversight and intermediary supervision, and it clears and settles through its subsidiaries NSE Clearing Limited and NSE IFSC Clearing Corporation Limited.

Market leadership is near-total in cash equities and equity futures and dominant, but eroding, in equity options. In Fiscal 2026 and the three months ended June 30, 2026 respectively, NSE held 92.99% and 93.05% of the Indian cash market by total turnover, 99.79% and 99.72% of equity futures, 74.71% and 68.48% of equity options on premium turnover, 99.48% and 100.00% of exchange-traded currency futures and 100.00% and 100.00% of exchange-traded currency options. Against leading listed exchange groups globally it was the largest multi-asset class exchange by number of cash equity trades and equity derivative contracts in both periods, with a global share of 11.38% and 51.18% respectively in Fiscal 2026, and it has been the world’s largest derivatives exchange by contracts traded for seven consecutive years. NSE Clearing cleared 88.42% of the cash market and 91.04% of equity derivatives by value in Fiscal 2026.

As of June 30, 2026 the exchange served 132.37 million Unique Registered Investors across over 99% of Indian postal codes, supported 261.36 million registered investor accounts and 1,328 trading members, and hosted 3,005 Listed Entities. Revenue from operations was ₹ 16,601.31 Crore in Fiscal 2026 and Profit After Tax ₹ 10,302.06 Crore. In the three months ended June 30, 2026 revenue from operations rose 13.10% to ₹ 4,560.41 Crore and Profit After Tax rose 6.71% to ₹ 3,120.08 Crore. Headcount was 2,914 as of June 30, 2026 against 2,676 a year earlier.

IPO Details:

Particulars	Details
IPO Date	September 17, 2026 to September 21, 2026
Anchor Investor Bidding Date	September 16, 2026
Issue Type	100% Book Built Offer – Offer for Sale only
Tentative Listing Date	September 24, 2026 (BSE Limited only)
Face Value	₹ 1 per Equity Share
Price Band	₹ 1,700 to ₹ 1,785 per Equity Share
Employee Discount	₹ 170 per Equity Share
Lot Size	8 Equity Shares
Minimum Retail Investment	₹ 14,280 (1 lot at the Cap Price)
Issue Size	Up to 12,64,36,650 Equity Shares; ₹ 21,494.23 Crore at the Floor Price to ₹ 22,568.94 Crore at the Cap Price
– Fresh Issue	Nil
– Offer for Sale	Up to 12,64,36,650 Equity Shares of face value ₹ 1 each
Employee Reservation	Up to ₹ 70.00 Crore
Offer as % of post-Offer Capital	5.11%
Equity Shares Pre and Post Offer	2,47,50,00,000 Equity Shares (unchanged)
Post-Issue Market Cap	₹ 4,20,750.00 Crore at the Floor Price to ₹ 4,41,787.50 Crore at the Cap Price

Objects of the Offer:

The Offer is entirely an Offer for Sale. The Company will not receive any proceeds; the entire amount, net of each Selling Shareholder’s share of Offer expenses and taxes, goes to the Selling Shareholders. The stated objects are as follows.

Issue Objects	Est. Amt (₹ Cr.)
Carry out the Offer for Sale of up to 12,64,36,650 Equity Shares by the Selling Shareholders	21,494.23 – 22,568.94
Achieve the benefits of listing the Equity Shares on BSE Limited	Not quantified
Total	21,494.23 – 22,568.94

Key Strengths and Opportunities

1. Market leadership across every asset class on which the exchange trades

In Fiscal 2026 and the three months ended June 30, 2026 respectively, NSE held 92.99% and 93.05% of the Indian cash market by total turnover, 99.79% and 99.72% of equity futures, 74.71% and 68.48% of equity options on premium turnover, 99.48% and 100.00% of exchange-traded currency futures and 100.00% and 100.00% of exchange-traded currency options, according to the Redseer Report. It has been the largest Indian exchange by cash market and equity derivatives turnover continuously from Fiscal 2001, and by currency derivatives turnover from Fiscal 2009. Against leading listed exchange groups globally it was the largest multi-asset class exchange by number of cash equity trades and equity derivative contracts in both periods, with global shares of 11.38% and 51.18% in Fiscal 2026 and 10.68% and 50.22% in the three months ended June 30, 2026, and as of March 31, 2026 it had been the world’s largest derivatives exchange by contracts traded for seven consecutive years. NSE Clearing, India’s first clearing corporation, is also the largest by cleared value, with Fiscal 2026 and three-month shares of 88.42% and 86.63% in the cash market, 91.04% and 91.20% in equity derivatives and 88.83% and 84.17% in interest rate futures.

2. Structural growth in Indian capital markets feeds directly into the platform

As of June 30, 2026 NSE served 132.37 million Unique Registered Investors across over 99% of Indian postal codes. India’s nominal gross domestic product grew from US$ 2.61 trillion to US$ 3.92 trillion between Fiscal 2021 and Fiscal 2026, with a real growth rate of 7.60% in Fiscal 2026, the highest in the Group of Twenty, according to the Redseer Report. Total Fund Mobilisation on the exchange was ₹ 20,33,000.00 Crore in Fiscal 2026 and ₹ 6,19,000.00 Crore in the three months ended June 30, 2026, of which ₹ 1,78,000.00 Crore and ₹ 6,000.00 Crore came from fresh listings and offers for sale. NSE has been among the top three exchange groups globally by number of new IPO listings from Fiscal 2023 to Fiscal 2026 and among the top five in the three months ended June 30, 2026. Over the thirty years from June 1996 to June 2026 the Nifty 50 delivered annualised returns of 10.73% in rupee terms and the Nifty 500 11.91%, outperforming major developed and emerging market indices.

3. A vertically integrated stack with a record of firsts

In Fiscal 1995 NSE was the first stock exchange in India, among those still operational, to introduce a fully automated screen-based electronic trading system, through the NEAT platform, and NSE Clearing was India’s first clearing corporation to be established and the first to provide a settlement guarantee mechanism, according to the Redseer Report. NSE Clearing was among the first clearing corporations globally to transition gradually to a T+1 settlement cycle and has since introduced T+0. The settlement backstop is the Core Settlement Guarantee Fund, which stood at ₹ 13,392.31 Crore as of June 30, 2026. NSE held a market share of 71.38% in electricity futures by number of lots traded between July 14, 2025 and March 31, 2026 and 53.52% between April 1, 2026 and June 30, 2026. The group runs listing platforms across the Mainboard, the EMERGE SME board and the Social Stock Exchange, on which 195 non-profit organisations were registered as of June 30, 2026, of which 91 were active, and it has been designated by SEBI as the data centre for the Past Risk and Return Verification Agency framework.

4. Technology platform engineered for scale and designated critical infrastructure

NSE has been designated a Critical Information Infrastructure by the National Critical Information Infrastructure Protection Centre. Its systems combine fault-tolerant servers carrying inbuilt redundancy with commodity servers, and it maintains a 4:1 ratio for critical telecom links to preserve connectivity. The platform handles equities, bonds, derivatives, exchange-traded funds, mutual funds, REITs and InvITs with microsecond order response times and nanosecond order acknowledgement response times in the cash market, equity derivatives and exchange-traded currency derivatives. The Company reports a strong cybersecurity record with no data breaches of its operations in the three months ended June 30, 2026 or in Fiscals 2026, 2025 and 2024. Reusing existing systems with minimal modification, it launched NSEIX and commenced live trading in June 2017, upgraded those systems in July 2022 and made NSEIX-SGX Connect at GIFT City fully operational in July 2023.

5. Scale, margins and cash generation that fund growth internally

Total income grew to ₹ 18,713.37 Crore in Fiscal 2026 from ₹ 16,352.06 Crore in Fiscal 2024, and to ₹ 5,252.17 Crore in the three months ended June 30, 2026 from ₹ 4,798.45 Crore a year earlier. In Fiscal 2026 NSE had one of the lowest non-volume-linked expenses, the highest adjusted operating EBITDA margin and one of the highest Profit After Tax Margins among leading listed stock exchange groups globally, per the Redseer Report. Operating EBITDA was ₹ 3,594.25 Crore in the three months ended June 30, 2026 against ₹ 3,129.74 Crore, and Normalised Operating EBITDA was ₹ 12,655.90 Crore in Fiscal 2026 against ₹ 13,317.07 Crore in Fiscal 2025. Dividend per share was ₹ 35 in each of Fiscals 2026 and 2025 against ₹ 18 in Fiscal 2024 as adjusted for the bonus issue. The marginal cost of adding products is low: electricity futures were launched in July 2025 at optimised capital expenditure. Contributions to the Core Settlement Guarantee Fund were ₹ 5.00 Crore, nil, ₹ 0.58 Crore, ₹ 234.09 Crore and ₹ 1,740.97 Crore across the two three-month periods and Fiscals 2026, 2025 and 2024.

Key Risks

1. Close to four-fifths of revenue is transaction charges, and three-quarters of that is options

Transaction charges were 79.44%, 78.65%, 79.55% and 82.07% of revenue from operations in the three months ended June 30, 2026 and Fiscals 2026, 2025 and 2024, of which the options business alone contributed 60.17%, 60.22%, 59.47% and 64.62% and the futures business 8.06%, 8.92%, 10.08% and 8.45%. Revenue from transaction charges fell 4.24% in Fiscal 2026 and futures transaction charges fell 14.31%, which the Company attributes to lower average daily trading volumes reflecting the macro-regulatory measures introduced to strengthen the equity index derivatives framework, specifically SEBI’s circulars of October 1, 2024 and May 29, 2025. The Company states this concentration exposes it to risks specific to the derivatives market, including changes in regulation, market sentiment and participant behaviour, and that SEBI may continue to introduce further interventions to curb excessive speculation in expiry-day index options.

2. Nearly half of revenue is routed through ten trading members

The top ten trading members contributed 47.00% of revenue from operations in the three months ended June 30, 2026 and 46.78%, 44.48% and 45.26% in Fiscals 2026, 2025 and 2024, against 45.60% in the three months ended June 30, 2025. The single largest contributed ₹ 352.08 Crore or 7.72% of revenue in the latest quarter and ₹ 1,321.09 Crore or 7.96% in Fiscal 2026, and the top three together accounted for 21.92% of quarterly revenue. The Company states that the loss, reduced activity or financial distress of one or more of these members, or their migration to competing exchanges or alternative trading venues, could reduce trading volumes and adversely affect revenue.

3. Equity options market share has fallen from 96.86% to 68.48% in two years

The Company’s market share in equity options by premium turnover was 96.86% in Fiscal 2024, 87.43% in Fiscal 2025, 74.71% in Fiscal 2026 and 68.48% in the three months ended June 30, 2026 – a loss of 28.38 percentage points in the segment that generates 60.17% of its revenue. The Company attributes this to SEBI’s May 2025 framework restricting each exchange to a single weekly expiry day for index derivatives, under which NSE’s contracts adopted Tuesday expiries and BSE’s adopted Thursday expiries for contracts expiring on or after September 1, 2025, following SEBI’s October 2024 framework restricting each exchange to weekly expiry contracts on only one benchmark index from November 20, 2024. It further flags increased securities transaction tax rates on equity derivatives effective April 2026 – on sale of equity futures from 0.02% to 0.05% of contract value, on options selling from 0.10% to 0.15% of premium value and on option exercise from 0.125% to 0.15% of intrinsic price – which it states may moderate speculative turnover and could disproportionately affect exchanges with significant exposure to derivatives activity.

Financial Snapshot:

Key Performance Indicator	Units	FY2026	FY2025	FY2024
Revenue from Operations	₹ Cr.	16,601.31	17,140.68	14,780.01
Revenue Growth	%	(3.15)	15.97	NA
Total Income	₹ Cr.	18,713.37	19,176.83	16,352.06
Transaction Charges	₹ Cr.	13,057.01	13,635.76	12,129.64
– Options	₹ Cr.	9,997.57	10,194.03	9,550.19
– Futures	₹ Cr.	1,480.10	1,727.26	1,248.98
– Cash market	₹ Cr.	1,554.64	1,688.55	1,235.91
Transaction Charges / Revenue from Operations	%	78.65	79.55	82.07
Options Charges / Revenue from Operations	%	60.22	59.47	64.62
Data Connectivity Charges	₹ Cr.	1,128.79	1,104.48	824.70
Data Feed and Terminal Services	₹ Cr.	470.07	407.13	339.26
Data Centre – Rack Charges	₹ Cr.	205.18	154.40	133.81
Listing Services	₹ Cr.	352.44	313.82	222.62
Licensing Services	₹ Cr.	151.85	120.50	97.54
Clearing and Settlement Services	₹ Cr.	251.45	321.34	134.81
Operating EBITDA	₹ Cr.	11,097.90	12,646.88	9,869.81
Operating EBITDA Margin	%	66.85	73.78	66.78
Normalised Operating EBITDA	₹ Cr.	12,655.90	13,317.07	11,442.45
Normalised Operating EBITDA Margin	%	76.23	77.69	77.42
Profit Before Tax (continuing operations)	₹ Cr.	13,895.58	15,474.78	11,184.28
Profit After Tax	₹ Cr.	10,302.06	12,187.69	8,305.74
PAT Growth	%	(15.47)	46.74	NA
Profit After Tax Margin	%	50.98	55.30	47.13
Basic and Diluted EPS	₹	41.62	49.24	33.56
Dividend per Share	₹	35.00	35.00	18.00
Total Equity	₹ Cr.	32,113.54	30,353.33	23,973.88
Book Value / NAV per Share	₹	129.75	122.64	96.86
Return on Net Worth	%	33.21	45.14	37.60
Return on Equity	%	32.98	44.87	37.37
Return on Capital Employed	%	42.80	52.11	45.50
Total Borrowings (fund based)	₹ Cr.	Nil	Nil	Nil
Bank Guarantees outstanding (non-fund based)	₹ Cr.	8,973.27	8,425.50	8,417.30
Treasury Investments	₹ Cr.	64,771.28	48,630.71	48,016.41
Core Settlement Guarantee Fund	₹ Cr.	13,079.15	12,075.25	8,857.24
Risk Reserve	₹ Cr.	4,805.00	8,533.00	8,533.00
Investor Protection Fund Trust	₹ Cr.	2,870.35	2,459.00	1,991.59
Cash Flow from Operating Activities	₹ Cr.	23,836.18	4,091.49	29,744.28
Cash Flow from Investing Activities	₹ Cr.	(45.87)	(5,430.98)	(8,463.00)
Cash Flow from Financing Activities	₹ Cr.	(8,808.85)	(4,599.75)	(3,993.69)
Purchase of PP&E and intangibles (incl. capital advances)	₹ Cr.	(1,754.78)	(1,305.69)	(470.30)
Unique Registered Investors	Million	129.09	112.81	91.75
Listed Entities on Exchange	Number	2,978	2,719	2,438
Colocation Member Racks	Full rack eq.	1,680	1,300	934
Nifty-linked Passive AUM	₹ Cr.	8,14,000.00	7,63,000.00	6,30,000.00
Total Fund Mobilisation	₹ Cr.	20,33,000.00	18,68,000.00	13,86,000.00
ADTV – Cash market	₹ Cr.	1,05,516.67	1,12,963.25	81,721.29
ADTV – Equity futures	₹ Cr.	1,59,443.21	1,85,901.44	1,34,000.34
ADTV – Equity options (premium value)	₹ Cr.	57,661.75	62,448.66	61,778.84

Key Performance Indicator	Units	Q1 FY2027	Q1 FY2026	Change
Revenue from Operations	₹ Cr.	4,560.41	4,032.24	13.10%
Transaction Charges	₹ Cr.	3,622.66	3,153.60	14.87%
Total Income	₹ Cr.	5,252.17	4,798.45	9.46%
Operating EBITDA	₹ Cr.	3,594.25	3,129.74	14.84%
Operating EBITDA Margin	%	78.81	77.62	119 bps
Profit Before Tax (continuing operations)	₹ Cr.	4,169.48	3,775.99	10.42%
Profit After Tax	₹ Cr.	3,120.08	2,923.85	6.71%
Basic and Diluted EPS (not annualised)	₹	12.61	11.81	6.77%
Book Value / NAV per Share	₹	142.40	134.67	5.74%
ADTV – Cash market	₹ Cr.	1,35,948.73	1,08,542.18	25.25%
ADTV – Equity options (premium value)	₹ Cr.	64,351.78	55,513.61	15.92%
ADTV – Equity futures	₹ Cr.	1,53,078.90	1,68,429.64	(9.11)%
Unique Registered Investors	Million	132.37	116.23	13.89%

Peer Comparison:

Company	FY2026 Revenue (₹ Cr.)	P/E (x)	RoNW (%)
National Stock Exchange of India Limited	16,601.31	40.85 – 42.89	33.21
BSE Limited	4,833.95	54.28	45.00

Valuation:

Metric	At Floor ₹ 1,700	At Cap ₹ 1,785
Post-Issue Market Capitalisation (₹ Cr.)	4,20,750.00	4,41,787.50
Offer Size (₹ Cr.)	21,494.23	22,568.94
P/E on FY2026 EPS of ₹ 41.62 (x)	40.85	42.89
P/E on trailing twelve month EPS of ₹ 42.42 (x)	40.08	42.08
P/B on FY2026 NAV of ₹ 129.75 (x)	13.10	13.76
P/B on June 30, 2026 NAV of ₹ 142.40 (x)	11.94	12.54
Market Cap / FY2026 Revenue (x)	25.34	26.61
Dividend Yield on FY2026 DPS of ₹ 35 (%)	2.06	1.96
Industry P/E – BSE Limited (x)	54.28	54.28

Conclusion

National Stock Exchange of India Limited (NSE) offers investors an opportunity to participate in one of the strongest market infrastructure businesses in India. The company has a near-dominant position across major asset classes, with 92.99% market share in cash equities, 99.79% in equity futures and 74.71% in equity options in FY2026. Its scale, liquidity, technology infrastructure, integrated clearing ecosystem and extensive investor base create a strong competitive moat that would be difficult for competitors to replicate. Financially, NSE remains highly attractive, despite a moderation in FY2026. Revenue from operations stood at Rs 16,601 crore, while PAT was Rs 10,302 crore, with an operating EBITDA margin of 66.85% and ROE of 32.98%. The balance sheet is also strong, with zero fund-based borrowings and substantial treasury investments. More importantly, Q1 FY2027 showed renewed momentum, with revenue rising 13.10%, operating EBITDA increasing 14.84% and cash-market ADTV growing 25.25% year-on-year.

However, investors should monitor the company’s dependence on derivatives. Options contributed 60.22% of FY2026 revenue from operations, while NSE’s equity-options market share declined from 96.86% in FY2024 to 68.48% in Q1 FY2027. Continued regulatory interventions and higher transaction taxes could impact speculative derivatives volumes. At the upper price of Rs 1,785, NSE is valued at 42.89x FY2026 earnings and, which is supported by its superior market position, profitability, scalability and long-term growth opportunity.

Considering its dominant leadership, strong financial profile, high margins, debt-free balance sheet and structural growth in India’s capital markets, we suggest subscribe this IPO for Long Term.

(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)

(સ્પષ્ટતા: અત્રેથી આપવામાં આવતી તમામ પ્રકારની માહિતી કોઇપણ પ્રકારે રોકાણ/ ટ્રેડીંગ માટેની સલાહ નથી. બજારોમાં રોકાણ જોખમોને આધીન છે અને રોકાણ કરતા પહેલા કૃપા કરીને તમારા સલાહકારની સલાહ લો. વધુમાં અત્રે પ્રગટ થયેલા કોઇપણ સમાચાર કે વિગતો સાથે businessgujarat.in અંશતઃ કે સંપુર્સણપણે સહમત નથી.)