NSE’s proposed IPO is poised to value India’s largest stock exchange at around Rs 5 lakh crore, crystallising a behemoth franchise into a listed play on the country’s capital-market deepening story while throwing up two critical scenarios that investors must track closely.

National Stock Exchange of India Ltd (NSE) has filed its DRHP for an IPO structured entirely as an Offer for Sale (OFS), with up to 148.9 million equity shares, around 6% of outstanding equity, being offloaded by existing shareholders. Key sellers include State Bank of India, MS Strategic (Mauritius), Canada Pension Plan Investment Board, Aranda Investments (Mauritius) and Bank of Baroda, signalling a broad-based monetisation by marquee financial institutions.

Centrum Institutional Research characterises NSE as a behemoth, underlining its dominant position with about 93% market share in cash equities, nearly 100% in equity futures and roughly 72% in equity index options turnover in FY26, alongside near-monopolistic shares in currency derivatives and a commanding presence in corporate bonds clearing.

NSE valuation math

Assuming a market capitalisation of Rs 5 trillion (lakh crore), the implied valuation works out to around 36x FY28E EPS under the base case and about 35x under the bull case, reflecting a rich multiple for a high-margin, high-ROE exchange franchise.In the second scenario of a higher market capitalisation of Rs 5.5 trillion, the implied multiples rise to nearly 40x and 38x FY28E EPS under the base and bull cases respectively, underscoring how sensitive the stock would be to growth delivery and regulatory outcomes.

Centrum notes that revenue from operations grew at a strong 24% CAGR over FY21–FY26, with EBITDA and net profit rising at 23% CAGR and margins consistently above 70% and ROE above 30%, even after a softer FY26. “We expect earnings momentum to recover from FY27 onwards, with net profit projected to grow at ~16% CAGR over FY26–FY28E,” the report states, arguing that structural drivers remain intact despite cyclical and regulatory headwinds.
Under the first scenario, the market effectively validates NSE’s Rs 5 lakh crore valuation as a justified structural premium on India’s financialisation story and the exchange’s entrenched market leadership. NSE currently services over 129 million unique registered investors, enables trading across 3,228 securities and instruments, and, along with its clearing arm NCL, captures over 85% of corporate bond trading value settled via clearing corporations in India.
The DRHP-backed projections assume that revenue growth normalises after the FY26 blip, with operating revenue expected to rise from Rs 166 billion in FY26 to Rs 218 billion by FY28, while EBITDA recovers from Rs 133 billion to about Rs 192 billion and ROE moves back towards the high-30s. In this construct, the IPO price and subsequent listing sustain elevated multiples on the back of:
Robust transaction-led income, which contributed nearly 80% of operating revenue in FY21–FY26 and remains the primary earnings engine.

Continued cash-market deepening, with turnover having grown six-fold from Rs 50 trillion in FY16 to Rs 280 trillion in FY26, aided by rising investor penetration and higher market-cap-to-GDP ratios.

Also Read | NSE IPO: Nithin Kamath explains why India has few businesses like this ‘cash generating machine’

Centrum highlights NSE’s innovation and infrastructure edge—pioneering fully automated trading (NEAT), leading on T+1 and T+0 settlements, and running an integrated risk architecture anchored by a Core Settlement Guarantee Fund of about Rs 130.8 billion—as critical to sustaining this premium franchise.

In such a benign scenario, any valuation at or above Rs 5 lakh crore is seen as a structural play, where investors effectively pay up for a compounding cash-generative asset tied to India’s rising household incomes, the shift from physical to financial assets, growing domestic institutional flows and steady FPI participation.

The second scenario the report flags is less benign: here, higher implied multiples at Rs 5–5.5 trillion market cap collide with regulatory tightening and volume moderation, forcing the market to reassess NSE’s valuation comfort zone. Nearly 80% of NSE’s revenues are linked to trading-related activities, with options alone contributing around 60% of operating revenue and futures another 9%, making the franchise acutely sensitive to derivatives volumes.

A large part of this activity is driven by proprietary traders—who account for about 50.7% of equity options premium turnover—and by algorithmic trading, which contributes roughly 55% of cash market volumes and 66% of equity derivatives trades on NSE. “Any regulatory or tax changes that reduce the attractiveness of derivatives trading or constrain algorithmic and proprietary trading activity could adversely impact market volumes,” Centrum cautions, pointing to STT hikes and tighter RBI exposure norms as key near-term swing factors.

The report notes that the Union Budget FY27 has raised STT on equity futures sales from 0.02% to 0.05% of contract value, increased STT on options selling from 0.10% to 0.15% of premium value, and pushed STT on option exercise from 0.125% to 0.15% of intrinsic value, explicitly aimed at curbing excessive short-term speculation. In parallel, revised RBI norms effective July 1, 2026, are expected to increase capital consumption and funding costs for banks and intermediaries exposed to capital markets, potentially dampening leverage and consequently trading volumes, especially in derivatives.

Also Read | NSE IPO: 10 key things investors need to know about India’s largest IPO in history

Against this backdrop, Centrum builds in a slower 9–11% CAGR for equity options premium turnover between FY26 and FY30, even as other segments like currency and commodity options are projected to grow at 20–25% CAGR, and corporate bonds and exchange-traded currency/commodity futures at mid- to high-teens. If these regulatory headwinds weigh more heavily than anticipated on derivatives volumes, the market may struggle to sustain a Rs 5 lakh crore-plus valuation, especially given NSE’s concentrated revenue dependence on top trading members, where the top five and top ten clients contribute around 32% and 47% of revenue respectively.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)