Delta Investment Advisors

National Stock Exchange Of India Ltd

NSE is India's largest trading platform and is a high-quality fintech like business that charges a small fee on every trade on its exchange, in FY26 revenue from operations was INR 16,601 cr of which transaction charges were INR 13,057 cr, or 78.65% of revenue. Equity options alone gave INR 9,998 cr of that, which is 76.57% of transaction charges and 60.22% of total revenue. Data and infrastructure services, covering connectivity, data feeds and colocation racks, were INR 1,804 cr (10.87%). Clearing and settlement was INR 251 cr (1.51%). The balance came from listing fees of INR 352 cr, investment income on member deposits of INR 842 cr, Nifty index licensing of INR 152 cr and other items of INR 143 cr.

Normalized operating EBITDA margin was 76.23% in FY26 and ROE was 33.21%, which is among the highest of any business in the market today. The business is asset light with significant operating leverage, requires very little capex, has no working capital requirements and no debt

IPO Details

RHP filed: 10 September 2026
IPO open and close: 17 September 2026 to 21 September 2026.
Price band: INR 1,700 to INR 1,785 per share, face value INR 1.
Issue structure: Complete offer for sale of 12,64,36,650 shares, INR 22,569 cr at the upper band. This is 5.11% of post offer capital. The company receives nothing. Includes an employee reservation of up to INR 70 cr.
Selling shareholders: The ten largest selling shareholders are State Bank of India (1.60 cr shares), Canada Pension Plan Investment Board (1.19 cr), Aranda Investments Mauritius, which is Temasek (1.12 cr), MS Strategic Mauritius, which is Morgan Stanley (1.10 cr), The New India Assurance (1.05 cr), SBI Capital Markets (0.88 cr), Bank of Baroda (0.77 cr), Stock Holding Corporation of India (0.62 cr), General Insurance Corporation of India (0.62 cr) and United India Insurance (0.60 cr).
BRLMs: Kotak Mahindra Capital, JM Financial, Morgan Stanley India, Citigroup Global Markets India, HSBC Securities and Capital Markets, J.P. Morgan India, Anand Rathi Advisors, Avendus Capital, Axis Capital, DAM Capital, Equirus Capital, HDFC Bank, ICICI Securities, IDBI Capital Markets, IIFL Capital Services, Motilal Oswal Investment Advisors, Nuvama Wealth Management, Pantomath Capital Advisors and 360 ONE WAM. SBI Capital Markets is the marketing lead manager.
Registrar: MUFG Intime India Private Limited
Auditor: Walker Chandiok & Co LLP, appointed 24 August 2026.

Disclaimer: Delta Investment Advisors (public market division under Dexter Capital) manages a SEBI registered Category III Alternative Investment Fund. This report does not constitute a recommendation but is only prepared for educational purposes. We (Dexter Capital and team members) are invested in NSE since Dec 2023. For any queries: shubham@deltainvest.in

This note is not reviewed by our CIO - Devendra Agrawal, CFA. It is prepared by our team of investment analysts, and is reviewed by our senior team members. We at Delta Partners continue to analyse many businesses and IPOs. Investors interested in being part of this network are requested to fill the form and our team will reach out with more details. Click Here

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Limited scope for listing gains | Track | Current GMP: ~4.9%

NSE is the strongest franchise in Indian capital markets and is run by a very able leadership under CEO Ashishkumar Chauhan. It holds 92.99% of cash market turnover and 99.79% of equity futures turnover, has led the cash market since FY2001, earns a 76.23% normalized operating margin and a 33.21% ROE, carries no debt and pays out most of its profit as dividend.

While NSE is one of the highest quality businesses one can own it is also priced just as richly to the extent that the company itself is not comfortable marking the issue at ~2,000 where it was trading in the unlisted just a few weeks back.

At the upper band pricing, NSE is valued at INR 4.4 Lac Cr with a normalized core P/E of 48.2x and normalized core EV/EBITDA of 30.8x which in our opinion is quite expensive, NSE trades at a premium to other global exchanges which are either in similar economic growth state and ones that have lower concentration risk, our view would be for investors to track the company for better entry valuations post lock-in expiry in 6 months.

Investors also need to be mindful of 3 important risks as they track NSE:

1. Revenue from options trading is speculative in nature and has properties very similar to Real Money gaming which has been banned in India along with a few other countries as well, SEBI has taken cognizance of this in its annual report where it published majority of the options traders lose money, further it has also taken a small step to curb this activity when it limited the exchanges to have only 1 index expiry per week – this intervention has also led to BSE gaining market share resulting in sharp uptick in its revenue. Any further action on this can significantly impact top and bottom line.

2. Secondly, high operating leverage can cut both ways - any slowdown or decline in revenue can create a magnifying negative impact on NSE’s profits.

Lastly, succession can be an issue as CEO Ashishkumar’s term is ending on July 2027, while he is eligible for another term as per SEBI there is a possibility of it not happening and also long term succession issue will persist post his second term and this can weight on company/stock performance as we have seen in the case of Kotak and HDFC Bank.

Key Positives

NSE's dominance is a result of liquidity which is a self-reinforcing input, order flow concentrates where depth exists, and once concentrated it is very hard to dislodge. Global precedent supports this: Eurex over LIFFE, Cboe after absorbing BATS. NSE leads across nearly every asset class 92.99% share of cash market turnover, 99.79% of equity futures turnover, 99.48% of currency futures, 100% of interest rate futures, 85.65% of corporate bond settlement value, 71.38% of electricity futures lots.

Operating leverage is structurally high, NSE's non-volume-linked expense base is among the lowest globally because it operates in a single jurisdiction on one unified platform.

Unique registered investors grew at 26.93% CAGR from 30.87 mn to 129.09 mn, demat accounts across the industry grew at 32.43% CAGR to 224.51 mn. Algo trading is now 55% of cash market and 66% of equity derivative trades, which directly drives the annuity-like colocation and connectivity lines rather than the volatile transaction line.

Redseer projections to FY30: cash market turnover INR 280.26 Lac Cr to INR 473-507 Lac Cr (14-16% CAGR); equity futures INR 394.67 Lac Cr to INR 715-765 Lac Cr (16-18% CAGR); equity options premium INR 190.65 Lac Cr to INR 269-289 Lac Cr (9-11% CAGR).

Key Issues

SEBI intervention: SEBI capped weekly expiries in November 2024, raised lot sizes and lifted STT on derivatives from April 2026. Equity options give 60.22% of revenue, market share slipped to 68.48% in the June 2026 quarter from 74.7% in FY26. Further as a result of this intervention BSE revenues grew substantially faster than NSE at ~63% as it gained market share in the options segment.

Revenue concentration risk: Close to half of revenue comes from ten brokers out of 1,325 trading members. The top three alone were 23.31% of revenue in FY26, all ten are domestic, are corporates or LLPs, and none is a related party. Options is the main revenue driver with ~60% of the revenues any impact/changes to regulation around it can lead to meaningful dent in top and bottom line.

Negative operating leverage risk: High operating leverage can cut both ways any slowdown or decline in revenue can have magnifying negative impact on NSE’s profits.

Core SGF and IPFT contributions: Risk Factor 31 on page 52 flags that contributions to these funds can rise materially and directly reduce profit and dividend capacity. FY24 alone cost INR 1,741 cr. The corpus is INR 13,392 cr and is sized by stress tests, so it moves with volumes.

Contingent liabilities: These include Metropolitan Stock Exchange's INR 857 cr compensation claim pending before NCLAT, a INR 55.5 cr CCI penalty for predatory pricing in currency derivatives, and a INR 395 cr income tax demand on NCL for disallowing the Core SGF deduction. All are stayed and pending.

Outstanding litigation: Against the company sit 17 criminal proceedings, 44 tax proceedings, six regulatory actions and 19 civil matters involving INR 2,584 cr. Separately, NSE has offered INR 1,491 cr to settle the colocation and dark fibre cases, which SEBI has not yet formally approved.

Not provided for: Almost none of this sits in the books. Management relies on external legal opinion that adverse outcomes are not probable, so only the INR 100 cr SAT penalty and the INR 1,391 cr settlement provision are recognised. Everything else stays off balance sheet.

Consistent non-compliance: Risk Factor 34 lists repeated lapses. The board ran 147 days below minimum strength, 157 days without a valid Nomination and Remuneration Committee and 651 days without a chairperson. SEBI also issued two written warnings in February 2024 over IPFT shortfalls.

Succession issues: CEO Ashishkumar has been great steward of the business and since his term ends in July 2027 there is an overhang of succession at the company and although he is eligible for another term, the issue will still remain post that.

Business Overview

NSE started trading in 1994 and is India's largest exchange. As of 30 June 2026, it had 132.37 Mn unique registered investors, 3,005 listed entities and 1,325 trading members spread across over 99% of India's postal codes.

The platform trades cash equities, index and stock futures and options, currency and interest rate derivatives, commodity and electricity futures, corporate bonds and government securities, and mutual fund units. It also runs listing platforms for mainboard, SME and social enterprises, and a mutual fund order platform that did 48.87 mn orders in the June 2026 quarter.

Brokers pay NSE, not investors. Cash market and futures are charged on turnover value while options are charged on premium value, which is a far smaller and more volatile base. Pricing is a published tariff approved by SEBI, volume discounts are barred, and the True to Label rule forces the same charge for every member.

NSE owns the full chain. NSE Clearing stands as counterparty to both sides of every trade and holds member margins. NSE Indices runs Nifty, which 72.59% of India's passive AUM tracks. Separate arms sell data feeds, terminals and colocation racks, and NSE International Exchange operates at GIFT City.

NSE has 7 data centers, over 14,000 servers, 2,506 full rack equivalents of which 1,868 are rented to 266 members, and throughput of 12 bn to 14 bn messages daily against capability of 5 mn messages a second. Algo trading is 55% of cash market volumes.

The group has 13 subsidiaries and 9 associates, including a 15% stake in NSDL and 25% in Power Exchange India. NSE has no identifiable promoter. The largest shareholder is LIC at 10.72% and no other holder crosses 4.54%, so control sits with a professional board approved by SEBI.

Financial Overview

FY26 revenue was INR 16,601 cr of which transaction charges were INR 13,057 cr (78.65%) and out of that equity options alone were INR 9,998 cr (60.22% of revenue). Data and infrastructure services was INR 1,804 cr (10.87%), investment income INR 842 cr (5.07%), listing INR 352 cr (2.12%) and clearing INR 251 cr (1.51%).

FY26 was a down year. Revenue fell 3.16% from INR 17,142 cr and profit fell to INR 10,302 cr from INR 12,188 cr, as SEBI's derivative curbs pulled equity options premium ADTV down to INR 5.77 Lac Cr from INR 6.24 Lac Cr. Total income fell 2.42% to INR 18,713 cr.

NSE's operating margins are among the highest among any businesses normalized operating EBITDA margin which adds back Core SGF contributions, SEBI settlement fees and the labour code charge, held at 77.42%, 77.69% and 76.23%.

Core SGF is the default fund at the clearing corporation. The parent's contribution is expensed while the clearing corporation's is taken straight from retained earnings. The P&L charge was INR 1,741 cr in FY24, INR 234 cr in FY25 and INR 0.58 cr in FY26 varying as per SEBI's instructions on the size of corpus which stands at INR 13,079 cr.

ROE was 33.21% in FY26 against 45.14% in FY25 and 37.60% in FY24, on net asset value per share of INR 129.75 as of March 2026. NSE has no debt, working capital is negative because members fund the system through deposits and margins, on which NSE earns the investment income.

Reported FY26 operating cash flow of INR 23,836 cr includes INR 15,887 cr of member float and restricted funds, being INR 14,484 cr of settlement and margin liabilities, INR 1,056 cr of Core SGF and INR 347 cr of deposits. Adjusted for these, operating cash flow was INR 7,949 cr against capex of INR 1,755 cr.

The FY26 dividend of INR 8,662 cr exceeded adjusted operating cash flow of INR 7,949 cr. The gap was covered by INR 1,860 cr of interest received on the treasury book, which the cash flow statement places under investing activities. Payout is therefore part funded by investment income, not by trading fees alone.

Promoters and Management

NSE has no identifiable promoter, instead Governing Board has 12 directors, made up of seven public interest directors including the Chairperson.

NSE has consistently had issues with governance as the board ran 147 days below the minimum of six directors from November 2023, went 157 days without a validly constituted Nomination and Remuneration Committee and 651 days without a Chairperson, drawing RoC show cause notices in January 2026.

Key management personnel

Shri Srinivas Injeti, Chairperson and Public Interest Director. Appointed September 2025. Retired 1983 batch IAS officer, former Secretary in the Ministry of Corporate Affairs and founding chairperson of IFSCA. Has previously served on the boards of SEBI and LIC.

Shri Ashishkumar Chauhan, Managing Director and CEO. In office since July 2022 on a five year term running to July 2027. IIT Bombay and IIM Calcutta. Founding member of NSE, ran BSE for a decade, earlier group CIO at Reliance.

Shri Viral Mody, Executive Director, Vertical 1. Appointed May 2026, aged 49. Computer engineer from Mumbai University. Was NSE's Chief Technology Officer for applications and development, with earlier stints at TCS, NSEIT and Wipro. Handles technology and digital transformation.

Shri Sanjay Shorey, Executive Director, Vertical 2. Appointed May 2026. Commerce and law graduate from Delhi University. Former senior member of the Indian Corporate Law Service, bringing regulatory compliance, corporate governance and legal prosecution experience to the regulatory side of the exchange.

Shri Ian Desouza, Chief Financial Officer. Joined July 2024. Chartered accountant and cost accountant. Previously CFO at Bank of Baroda, Bajaj Finance and India Mortgage Guarantee Corporation, with earlier roles at Yes Bank, HDFC Bank and HSBC. Drew INR 2.5 cr in FY26.

Shri Sriram Krishnan, Chief Business Development Officer. Joined December 2022, running products, relationships and business development. Chartered accountant and cost accountant. Previously managing director at Deutsche Bank, with earlier roles at HSBC, Templeton and Citibank. Drew INR 3.8 cr in FY26.

Shri Somasundaram K S, Chief Enterprise Risk Officer. Joined October 2018 and heads enterprise risk, which is the core regulatory function for a market infrastructure institution. BITS Pilani and IIM Bangalore. Previously at Yes Bank and Citibank. Drew INR 3.5 cr in FY26.

Shri Shharad Dhakkate, Chief Human Resources Officer. Joined January 2023, heading human resources, administration, premises and commercial functions. MBA from Nagpur University. Previously at SBI General Insurance, SBI Life, Idea Cellular and Tata Communications. Drew INR 2.1 cr in FY26.

No director or KMP holds any shares in NSE and the company has never issued an ESOP scheme, so management has no equity alignment with incoming shareholders.

Industry and Developments

India's cash market turnover reached INR 280.26 Lac Cr in FY26 against INR 49.77 Lac Cr in FY2016, a six fold rise. Four things drive it: nominal GDP, which grew from US$0.47 trillion in FY2001 to US$3.92 trillion in FY26, market capitalisation to GDP, free float now near 50%, and investor count. Demat accounts grew at 32.43% a year to 224.51 mn by March 2026.

Redseer projects FY30 turnover by segment. Cash market goes from INR 280.26 Lac Cr to INR 473 Lac Cr to INR 507 Lac Cr, a 14% to 16% CAGR. Equity futures from INR 394.67 Lac Cr to INR 715 Lac Cr to INR 765 Lac Cr, 16% to 18%. Equity options premium from INR 190.65 Lac Cr to INR 269 Lac Cr to INR 289 Lac Cr, only 9% to 11%. Corporate bonds grow 13% to 18%, currency and commodity futures 15% to 20%, and their options premium 20% to 25%.

SEBI tightened derivatives from October 2024. Each exchange was limited to one weekly expiry on one index, contract sizes were raised, option premium had to be collected upfront and expiry day margins were added. From September 2025

NSE moved to Tuesday expiry and BSE took Thursday. STT on futures went from 0.02% to 0.05% and on options from 0.10% to 0.15% from 1 April 2026. Equity options ADTV on premium fell to INR 5.77 Lac Cr in FY26 from INR 6.24 Lac Cr, transaction charges fell 4.24% and options share fell to 74.71%, then to 68.48% in the June 2026 quarter.

Only three exchanges serve Indian equity and equity derivatives, and NSE cannot use price to defend share because volume discounts are barred and the True to Label rule forces uniform charges. BSE is the only real competitor and its equity derivatives revenue rose to INR 3,134 cr in FY26 from INR 1,416 cr in FY25. NCDEX received in principle SEBI approval in July 2025 to enter cash equities and equity derivatives.

The non-trading services are growing faster and are less volume linked. Colocation and connectivity ride on algo trading, which is now 55% of cash market and 66% of derivative trades, and NSE's member racks rose to 1,868 full rack equivalents by June 2026 from 934 in March 2024. Passive AUM in index funds and ETFs was INR 12.33 Lac Cr by June 2026, of which Nifty indices tracked INR 8.95 Lac Cr, a 72.59% share, which feeds index licensing and data revenue.