NSE shares fall 2%, slip below IPO price, but analysts’ target prices go up to Rs 2,050. Time to buy?

Shares of newly listed NSE fell 2% to a low of Rs 1,761 on the BSE on Monday, slipping below the IPO price of Rs 1,785 apiece. Following the decline, NSE’s market capitalisation stood at Rs 4.36 lakh crore, placing it as the 11th-largest listed Indian company, ahead of Tata Group’s Titan Company.

Reliance Industries remained India’s most valuable listed company with a market capitalisation of Rs 16.42 lakh crore, followed by HDFC Bank at Rs 11.16 lakh crore. Other companies ranked ahead of NSE include Bharti Airtel, ICICI Bank, SBI, TCS, Bajaj Finance, L&T, HUL and Sun Pharma, according to stock exchange data.

Should you buy, sell or hold NSE shares?

Macquarie says NSE is ‘The Dominator’ after it assigned an Outperform rating and a Rs 1,965 target price, implying an upside potential of 9.5% from the last close of Rs 1,793. The brokerage highlighted NSE’s full suite of services, technology and deep liquidity, which make it a key part of India’s financialization, calling it the “lynchpin” of India’s financialization. Strong network effects, profitability, and cash generation further support the business.

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Emkay also initiated coverage on NSE with a Buy rating and a Sep-27E target price of Rs 2,050, implying around 14% upside. The brokerage’s positive view on NSE rests on three key factors. First, India’s capital market development and growth story has a long runway as wealth creation and financialisation gain momentum, with India’s per capita GDP expected to move from around $3,000 to $10,000 over the coming decades.

Second, NSE has maintained a resilient leadership position across capital market business segments over the decades. Emkay believes its business model has sufficient levers to adapt to changing regulatory and macroeconomic conditions while continuing to deliver profitable growth.
Third, strong profitability and cash generation at market infrastructure institutions (MIIs), including stock exchanges, allow them to command higher valuation multiples globally than other capital market players, which are more fragmented and exposed to competition.NSE commands uncontested leadership across cash and derivatives, driven by a self-reinforcing liquidity flywheel. In the cash segment, NSE holds 93% market share while retaining near-monopoly in the equity futures and stock options segment. While BSE has captured market share following its derivatives relaunch, the brokerage believes index options are transitioning to a phase of stabilisation following several regulatory rejigs. “Supported by secular domestic financialization and under-penetration, NSE possesses a multi-year structural runway, as rising household savings, record SIP flows, and capital formation continue to compound,” it added.

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Domestic brokerage firm PL Capital has assigned an ‘Accumulate’ rating with a target price of Rs 1,950, forecasting an upside of over 9% from current levels.

While transaction income accounted for 79% of NSE’s operating revenue in FY26, PL Capital expects the exchange to increasingly benefit from a more diversified revenue mix, supported by multiple recurring income streams. Listing services, colocation, data feed and index licensing are expected to grow at a faster 14% CAGR over FY26-29E, compared with 9% for transaction income.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.