Can NSE IPO deliver long-term growth for high-risk investors?

ET Intelligence Group: National Stock Exchange of India (NSE), the country's largest stock exchange by total turnover in cash market and equity derivatives, plans to raise up to ₹22,562 crore through an offer for sale (OFS). The OFS will be carried out by 23 existing investors including State Bank of India, Canada Pension Plan Investment Board, Aranda Investments, The New India Assurance Company, SBI Capital Markets and Bank of Baroda. NSE is expected to benefit from the rising participation of retail investors in capital markets. The exchange remains heavily reliant on transaction volumes. Transaction charges formed nearly 79% of FY26 operating revenue, including nearly 60% from options, exposing earnings to regulatory changes, competition, and stock market volatility. Given these factors, the issue appears to be suitable for long-term investors with a higher risk tolerance.

ET Bureau

Business

Incorporated in 1992, NSE operates a vertically integrated platform covering trading, clearing, settlement, listing, market data and index licensing. Its trading portfolio covers cash equities, equity futures and options, mutual funds, commodity derivatives, exchange-traded currency derivatives, wholesale debt and interest-rate futures. In FY26, NSE commanded nearly 93% share in cash market, 99.7% in equity futures and 68.5% in equity options premium turnover.

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While transaction charges remain the core revenue driver, the company has diversified its revenue base through connectivity, colocation, data and licensing services. Revenue from these businesses rose 9.5% year-on-year to ₹1,955.9 crore in FY26 and accounted for 11.8% of operating revenue.

As of June 30, 2026, it had 132.4 million unique registered investors, 1,328 trading members and 3,005 listed entities. However, trading activity remains concentrated, with the top 10 trading members accounting for 46.8% of FY26 revenue from operations. Lower trading volumes, regulatory changes affecting derivatives, technology failures, cyber risks, and delays in implementing diversification initiatives remain key risks.

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Financials

Though revenue grew by 6% annually over the past three years, it fell by 3% year-on-year to ₹16,601 crore in FY26. The decline was primarily driven by a 4% fall in transaction-charge revenue to ₹13,057 crore as cash-market, futures and options volumes moderated following regulatory changes. Operating margin before depreciation and amortisation (Ebitda margin) was 66.9% in FY26 compared with 66.8% in FY24 and was higher than BSE's 64% margin in FY26. Net profit increased by 11% annually to ₹10,302 crore in FY26 from ₹8,305.7 crore in FY24. Return on equity moderated to 33% in FY26 from 37% in FY24 compared with 45% for BSE. It's a debt-free company with a net cash position of ₹17,976 crore as of March 31, 2026.

Valuation

NSE's post-issue price-earnings (P/E) multiple of 42.9 is below BSE's 53, despite its dominant market position. The IPO offers investors exposure to a debt-free, tightly regulated exchange business protected by high entry barriers.