National Stock Exchange (NSE) IPO DHRP Analysis

IPO Analysis  |  BSE Main Board  |  100% Book Built Offer

Based on Draft Red Herring Prospectus dated June 17, 2026  |  Price Band: To Be Announced

STATUS: DRHP FILED  |  Offer: 100% OFS, 14,89,05,525 Shares (No Fresh Issue)  |  BSE Main Board  |  Exchange & Financial Market Infrastructure  |  Mumbai, Maharashtra

 National Stock Exchange of India Limited (NSE) is India's largest and the world's most active equity derivatives exchange. Incorporated on November 27, 1992 as a public limited company and commencing operations in March 1993, NSE introduced fully screen-based, anonymous electronic trading to India, replacing the open-outcry system that existed at BSE, and has been the dominant marketplace for Indian securities for over three decades. Its registered and corporate office is Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, Maharashtra. Website: www.nseindia.com.

Business model: NSE operates a vertically integrated exchange, it runs trading, clearing, listing, and data services through a single, interconnected platform. Unlike brokers or asset managers, NSE earns primarily from the volume of financial transactions executed on its platform. Revenue scales with market activity and investor participation, with minimal variable costs at the margin, giving the business exceptional operating leverage. The exchange also benefits from compounding network effects: more investors attract more issuers, more listings improve liquidity, greater liquidity draws in more participants and more sophisticated products.

NSE operates across three reporting segments:

l  Trading Services: Transaction charges from equity cash market, equity derivatives (futures and options), currency derivatives, commodity derivatives, interest rate futures, and wholesale debt market; plus listing fees, data centre rack charges, and data connectivity charges from colocation members.

l  Clearing Services: Clearing and settlement of trades across all asset classes through NSE Clearing Limited (NCL) and NSE IFSC Clearing Corporation. Investment income earned on margin money and cash collateral deposited by clearing members is also reported here.

l  Others: Data Feed & Terminal services (market data dissemination through NSE Data & Analytics Limited and Cogencis Information Services), Licensing services (Nifty Indices licensed to global and domestic asset managers), and other ancillary revenue streams.

Market position as of Fiscal 2026 (year ended March 31, 2026).

l  Largest stock exchange in India by total cash market turnover, continuously since Fiscal 2001. Market share: 92.99% in cash market (total turnover basis).

l  Largest exchange globally for equity derivatives by number of contracts, global market share of 51.18% in equity derivative contracts and 11.38% in cash equity trades (Source: World Federation of Exchanges).

l  Near-monopoly in equity derivatives: 99.79% market share in equity futures (turnover), 74.71% in equity options (premium turnover), 99.48% in exchange-traded currency futures, 100.00% in currency options.

l  129.09 million Unique Registered Investors as of March 31, 2026, spanning over 99% of India's postal codes, growing at a CAGR of 26.93% from 30.87 million in March 2020.

l  2,978 entities listed on NSE as of March 31, 2026. Market capitalisation of listed entities: Rs.411.25 trillion. Total AUM of Nifty-linked passive funds: Rs.8.14 trillion across 425 Nifty indices.

l  Total Fund Mobilisation on NSE in Fiscal 2026: Rs.20.33 trillion, comprising Rs.4.78 trillion in equity and Rs.15.55 trillion in debt. NSE hosted 108 Mainboard IPOs and 111 SME IPOs in Fiscal 2026.

Revenue mix (Fiscal 2026): Transaction charges are the dominant revenue stream at 78.65% of revenue from operations (Rs.130,570.12 million), of which equity options alone account for 60.22% of total revenue (Rs.99,975.68 million). Non-volume-linked revenues, Data Connectivity (6.80%), Income on Investments (5.07%), Licensing/Nifty (2.83%), Listing Services (2.12%), Data Feed & Terminal (2.83%), Data Centre Racks (1.24%), Clearing & Settlement (1.51%), and Others, together contribute 21.35%.

Corporate structure: NSE does not have an identifiable promoter, a unique feature for a major Indian company. Its shareholder base consists of institutional investors including State Bank of India (largest single OFS seller: 2.475 crore shares), Bank of Baroda, MS Strategic (Mauritius) Limited (Morgan Stanley affiliate), Canada Pension Plan Investment Board, Aranda Investments (Mauritius) Pte Ltd, Stock Holding Corporation of India, General Insurance Corporation, New India Assurance, National Insurance Company, and United India Insurance.

This dispersed institutional ownership reflects NSE's origins as a broadly-held exchange institution, not a promoter-built business.

Key subsidiaries: NSE Clearing Limited (NCL, clearing corporation), NSE Investments Limited, NSE Data & Analytics Limited, NSE Indices Limited, Cogencis Information Services Limited, NSE IFSC Limited (NSEIX, GIFT City international exchange), NSE International Exchange (IFSC) Limited, and NSE Foundation (Section 8 CSR entity).

The company has divested its education business (NAL Academy / TalentSprint, gain of Rs.1,141.39 million net of tax in Fiscal 2026) and IT services subsidiary (NSEIT, sold in Fiscal 2025) as part of a non-core business disposal programme.

Statutory Auditors: Manian & Rao, Chartered Accountants (FRN: 001983S). The company's Financial Year runs April 1 to March 31. All financial information is Ind AS consolidated, restated.

Key Basics

This is a 100% Book Built Offer for Sale (OFS) on BSE Main Board. There is no Fresh Issue, NSE receives zero proceeds. All offer proceeds go to the Selling Shareholders. DRHP dated June 17, 2026. This is NSE's first public offer; no prior formal public market has existed for NSE shares. The offer is made under Regulation 45 of the SECC Regulations read with Rule 19(2)(b) of SCRR and Regulation 31 of SEBI ICDR Regulations. The designated stock exchange is BSE Limited.

Document Type	Draft Red Herring Prospectus (DRHP) dated June 17, 2026. Pre-SEBI observation stage. Price band and offer dates to be announced after SEBI observations.
Issue Type	100% Book Built Offer for Sale (OFS) of up to 14,89,05,525 Equity Shares of face value Rs.1 each. NO Fresh Issue. NSE receives zero proceeds, all sale consideration goes to Selling Shareholders.
Face Value	Rs.1 per Equity Share
Post-IPO Capital	Total post-bonus shares outstanding: 2,47,50,00,000 (2.475 billion shares). OFS = 14,89,05,525 shares = approx. 6.02% of post-offer paid-up capital. No new shares are issued.
Selling Shareholders	State Bank of India (up to 2,47,50,000 shares), MS Strategic Mauritius (1,60,00,000), CPPIB (1,18,74,060), Aranda Investments Mauritius (1,12,46,336), Bank of Baroda (1,09,86,250), Stock Holding Corp (1,08,90,000), GIC (1,06,58,000), New India Assurance (1,05,00,000), National Insurance (60,00,000), United India Insurance (60,00,000), and others.
No Promoter	Our Company does not have an identifiable promoter, a regulatory classification unique to NSE among major Indian companies. Governance is through a Governing Board.
Eligibility	Regulation 6(1) of SEBI ICDR Regulations (profitable company track) and Regulation 45 of SECC Regulations (specific to stock exchanges mandating public float).
Listing Exchange	BSE Limited (Main Board). Designated Stock Exchange: BSE.
BRLMs	20 BRLMs: Kotak Mahindra Capital, Morgan Stanley India*, HSBC Securities, SBI Capital Markets*, Avendus Capital, DAM Capital, HDFC Bank, IDBI Capital, Motilal Oswal Investment Advisors, Pantomath Capital, JM Financial, Citigroup Global Markets, J.P. Morgan India, Anand Rathi Advisors, Axis Capital, Equirus Capital, ICICI Securities*, IIFL Capital Services, Nuvama Wealth, 360 ONE WAM**. (*Marketing-only BRLMs per SEBI Merchant Bankers Regulations.)
Registrar	MUFG Intime India Private Limited (formerly Link Intime India Private Limited). Contact: Shanti Gopalkrishnan.
Employee Reservation	Equity shares reserved for Eligible Employees at a discount. Maximum bid amount per eligible employee: Rs.5,00,000; initial allocation cap Rs.2,00,000.
Bonus Issue History	4:1 bonus issue, 4 new shares for every 1 existing share, record date November 2, 2024. Pursuant to this, paid-up equity capital stands at 2,47,50,00,000 shares of Rs.1 each. All EPS and per-share figures are post-bonus adjusted across all three years.
Implied Market Cap	At the sole listed peer (BSE Limited) P/E of 66.67x on FY2026 EPS of Rs.41.62: implied price approximately Rs.2,774 per share. Implied market cap: approximately Rs.6.87 trillion (~US$72.6 billion at Rs.94.65/USD), positioning NSE among India's 5 largest listed companies.
Bid/Offer Dates	To be announced after SEBI observations and RHP filing.
Industry Peer P/E	BSE Limited: 66.67x (sole comparable domestic listed exchange peer). This is the High, Low, and Industry Composite, there is no other Indian exchange group listed.

 This is the most structurally different aspect of this IPO versus typical listings: NSE receives zero proceeds. This is a 100% Offer for Sale, every rupee raised goes to the Selling Shareholders (SBI, Bank of Baroda, CPPIB, insurance companies, and others). The company does not benefit financially from the capital raised.

Why is NSE doing this IPO if it gets no proceeds? Two reasons: (1) SEBI's SECC Regulations require stock exchanges to have a minimum public shareholding, listing creates the public float required by regulation. (2) NSE's institutional shareholders (banks, insurance companies) need a liquid exit mechanism for their stakes; an IPO creates a public market price and subsequent tradeability.

This is not an IPO driven by the company's capital needs, NSE is already debt-free and holds Rs.6,47,712.81 million (Rs.64,771 crore) in treasury investments as of March 31, 2026.

Object	Amount	Beneficiary	Details
Offer for Sale Proceeds		Selling Shareholders	100% to Selling Shareholders. NSE receives none. SBI alone is offering up to 2.475 crore shares. CPPIB's acquisition cost was Rs.324.13/share, implying an 8-9x return at the indicative price band, giving sellers strong motivation.
Offer Expenses		Shared	Listing fees, audit fees, BRLM fees, advertising, printing. Shared between NSE and Selling Shareholders pro-rata. NSE bears its allocable portion (listing fees, audit fees not attributable to Offer, certain regulatory charges).
Fresh Issue / Capex / Debt Repayment	NIL	Not applicable	No Fresh Issue. NSE has no outstanding loans or borrowings as of March 31, 2026. The company is already fully capitalised, holds Rs.6,47,712.81 million in own treasury investments, and has paid Rs.86,625 million in dividends in FY2026 alone.

The absence of a Fresh Issue is actually a strong signal: NSE does not need capital. The business generates sufficient cash organically to self-fund technology investments (Rs.4,220.26 million in IT capex in FY2026), pay large and growing dividends (Rs.86,625 million in FY2026), and maintain a fortress balance sheet. The listing creates a public market, it does not finance the company.

Financial Performance

Note: All figures in Rs. million unless stated. Three financial years: FY2024, FY2025, FY2026, all year-ends March 31. Restated Consolidated Financial Information under Ind AS. The scale of NSE's financials is extraordinary, this is a Rs.187,133 million total income business generating Rs.103,020 million in net profit with 67% operating EBITDA margins.

Revenue: Strong Growth in FY2025, Moderated by Regulation in FY2026

Revenue from operations: Rs.147,800.11 million (FY2024) to Rs.171,406.78 million (FY2025, +15.97%) to Rs.166,013.09 million (FY2026, -3.15%). The FY2025 growth was driven by surging equity derivatives volumes during a buoyant market period. FY2026 saw a 3.15% revenue decline primarily due to SEBI's regulatory tightening on equity derivatives, restricting weekly expiries to one per exchange (November 2024), increasing minimum contract sizes, imposing additional margin requirements, and mandating upfront option premium collection, which moderated speculative volumes.

Cash market ADTV fell 6.6%, equity futures ADTV fell 14.2%, and equity options premium ADTV fell 7.7%.

Profitability: World-Class Margins

Metric	FY2024 (Rs. Mn)	FY2025 (Rs. Mn)	FY2026 (Rs. Mn)
Revenue from Operations	1,47,800.11	1,71,406.78	1,66,013.09
Revenue Growth %	N/A	+15.97%	-3.15%
Other Income	15,720.51	20,361.53	21,120.61
Total Income	1,63,520.62	1,91,768.31	1,87,133.70
Employee Benefits Expenses	4,603.99	6,721.40	7,899.75
Regulatory Fees (SEBI fees)	9,805.73	9,626.45	7,963.50
Depreciation and Amortisation	4,395.51	5,465.86	6,235.14
Other Expenses (tech, SEBI settlement etc.)	17,282.62	26,249.21	37,900.64
Contribution to Core SGF	17,409.72	2,340.89	5.76
Total Expenses	53,497.57	50,403.81	60,004.79
Share of Profit of Associates (equity method)	1,005.40	1,288.56	1,081.88
Exceptional Items (stake sale gains / one-offs)	814.35	12,094.72	10,745.00
Profit Before Tax (Continuing Operations)	1,11,842.80	1,54,747.78	1,38,955.79
Tax Expenses	27,778.00	38,690.30	37,160.50
PAT from Continuing Operations	84,064.80	1,16,057.48	1,01,795.29
PAT from Discontinued Operations	(1,007.39)	5,819.41	1,225.32
Total PAT (Profit for the Year)	83,057.41	1,21,876.89	1,03,020.61
Operating EBITDA	98,698.05	1,26,468.83	1,10,979.03
Operating EBITDA Margin %	66.78%	73.78%	66.85%
PAT Margin % (Total PAT / Total Income)	50.79%	63.55%	55.05%
Basic and Diluted EPS (Rs., post-bonus)	Rs.33.56	Rs.49.24	Rs.41.62
Weighted Average EPS (Rs.)	N/A	N/A	Rs.42.82 (weighted)
RONW %	37.60%	45.14%	33.21%
Return on Equity %	37.37%	44.87%	32.98%
Return on Capital Employed %	45.50%	52.11%	42.80%
NAV / Book Value per Share (Rs.)	Rs.96.86	Rs.1,22.64	Rs.1,29.75

The margin story is exceptional by any benchmark. Operating EBITDA margins of 67-74% over three years place NSE among the highest-margin exchange groups globally. PAT margins of 51-64% reflect the massive operating leverage inherent in an exchange business, once the fixed infrastructure is in place, incremental transaction volume flows almost entirely to the bottom line.

FY2026 PAT declined 15.4% from FY2025's Rs.1,21,877 million peak to Rs.1,03,021 million for two main reasons: (1) SEBI regulatory tightening on derivatives reduced transaction charge income by approximately Rs.5,787 million; and (2) SEBI settlement fees surged to Rs.14,315.57 million (from Rs.6,701.84 million in FY2025), primarily due to Rs.13,912 million provisioned for the Colocation WTM Order, Colocation AO Order, Dark Fibre WTM Order, and Dark Fibre AO Order settlements, large one-time charges. Strip out these two items and the underlying FY2026 business is comparable in profitability to FY2025.

Note on Core SGF contribution: FY2024 saw Rs.17,409.72 million contributed to the Core Settlement Guarantee Fund (a regulatory requirement), which depressed FY2024 reported profit significantly. In FY2026, this dropped to just Rs.5.76 million after SEBI confirmed the fund reached its required corpus, a Rs.17,404 million year-on-year tailwind in that line. Normalised Operating EBITDA margins (which add back Core SGF and SEBI settlement charges) were 76.23% (FY2026), 77.69% (FY2025), 77.42% (FY2024), remarkably stable underlying performance.

Balance Sheet

Balance Sheet Item	FY2024	FY2025	FY2026
Borrowings (Loans)	NIL	NIL	NIL
NAV / Book Value per Share (Rs.)	Rs.96.86	Rs.1,22.64	Rs.1,29.75
Treasury Investments (Own Surplus Funds, Rs. Mn)	4,80,164.07	4,86,307.12	6,47,712.81
Core SGF Corpus (Regulatory, Rs. Mn)	88,572.39	1,20,752.48	1,30,791.51
Risk Reserve (Rs. Mn)	85,330.00	85,330.00	48,050.00
Trade Receivables (Rs. Mn)	18,646.60	15,122.24	24,682.13
Settlement Obligations & Margin Money (Rs. Mn)	2,13,271.10	1,58,798.86	3,01,466.62
Dividend Paid (Rs. Mn)	39,600.00	44,550.00	86,625.00
Dividend Per Share (Rs., post-bonus adj.)	Rs.16.00	Rs.18.00	Rs.35.00 (incl. Rs.11.46 special)

Balance sheet highlights: NSE carries zero debt across all three years, no outstanding loans or borrowings as of March 31, 2026. Treasury investments (own surplus funds) of Rs.6,47,712.81 million represent accumulated retained wealth. The company paid Rs.86,625 million in dividends in FY2026 (including a one-time special dividend of Rs.11.46 per share), equivalent to approximately 84% of FY2026 total PAT.

This extraordinary dividend payout from a pre-IPO private company demonstrates the cash generation capacity and shareholder-friendly capital allocation of the business. Settlement obligations and margin money from members surged from Rs.1,58,799 million (FY2025) to Rs.3,01,467 million (FY2026), reflecting higher margin collateral from clearing members in March 2026, these are matched by corresponding assets and represent pass-through regulatory flows, not NSE's risk capital.

The Risk Reserve reduction from Rs.85,330 million to Rs.48,050 million reflects a Rs.37,280 million transfer to retained earnings after the Governing Board determined excess reserve had been accumulated.

Cash Flows

Cash Flow (Rs. Million)	FY2024	FY2025	FY2026
Net Cash from Operating Activities	2,97,442.79	40,914.87	2,38,361.75
Net Cash from Investing Activities	(84,629.98)	(54,309.76)	(458.68)
Net Cash from Financing Activities	(39,936.90)	(45,997.48)	(88,088.51)
Of which: Dividends Paid	(39,590.00)	(44,544.85)	(86,616.65)

NSE's operating cash flow requires contextual interpretation because it includes large movements in member margin money and settlement obligations, these clearing-related flows distort year-on-year comparison. The FY2025 operating cash flow of Rs.40,914.87 million (vs Rs.2,97,442.79 million in FY2024) reflects a large outflow in working capital changes related to settlement obligations, not a deterioration in operating business quality.

The underlying cash generation from fees is consistently strong. Financing outflows across all three years are almost entirely dividends, Rs.39,590 million, Rs.44,545 million, and Rs.86,617 million, a structural pattern of returning cash to shareholders with no debt financing cost.

Revenue Composition and Business Mix

Segment / KPI	FY2024	FY2025	FY2026	vs FY25
Revenue from Operations (Rs. Mn)	1,47,800	1,71,407	1,66,013	-3.2%
Transaction Charges: Options (Rs. Mn)	95,501.89	1,01,940.30	99,975.68	-1.9%
Transaction Charges: Futures (Rs. Mn)	12,489.75	17,272.58	14,800.97	-14.3%
Transaction Charges: Cash Market (Rs. Mn)	12,359.10	16,885.49	15,546.43	-7.9%
Total Transaction Charges % of Revenue	82.07%	79.55%	78.65%	-0.9pp
Data Connectivity Charges (Rs. Mn)	8,246.97	11,044.81	11,287.91	+2.2%
Data Feed & Terminal Services (Rs. Mn)	3,392.64	4,071.32	4,700.74	+15.5%
Licensing Services: Nifty Indices (Rs. Mn)	975.36	1,204.98	1,518.45	+26.0%
Listing Services (Rs. Mn)	2,226.18	3,138.21	3,524.36	+12.3%
Data Centre Rack Charges (Rs. Mn)	1,338.14	1,544.02	2,051.75	+32.9%
Clearing & Settlement Services (Rs. Mn)	1,348.12	3,213.42	2,514.51	-21.8%
Unique Registered Investors (millions)	91.75	112.81	129.09	+14.4%
Listed Entities on NSE (#)	2,438	2,719	2,978	+9.5%
Mainboard IPOs Hosted (#)	75	79	108	+36.7%
Total Fund Mobilisation (Rs. trillion)	13.86	18.68	20.33	+8.8%
Cash Market ADTV (Rs. Mn)	8,17,212.91	11,29,632.46	10,55,166.67	-6.6%
Equity Futures ADTV (Rs. Mn)	13,40,003.40	18,59,014.41	15,94,432.13	-14.2%
Equity Options ADTV: Premium (Rs. Mn)	6,17,788.39	6,24,486.60	5,76,617.54	-7.7%
Colocation Member Racks (# FRE)	934	1,300	1,680	+29.2%
Nifty-Linked Passive Fund AUM (Rs. trillion)	6.30	7.63	8.14	+6.7%
Total Nifty Indices (#)	388	412	425	+3.2%

The volume trends tell the core business story. Equity options, at 60.22% of revenue from operations, saw premium ADTV fall 7.7% in FY2026. Equity futures fell 14.2%. Both declines were directly caused by SEBI's multi-pronged regulatory tightening. Against these volume headwinds, non-volume-linked revenue streams grew strongly: licensing +26.0%, data centre racks +32.9%, data feed +15.5%, listing services +12.3%.

These reflect structural expansion, more listed companies, more colocation members, more passive fund assets tracking Nifty. The 108 Mainboard IPOs in FY2026 (vs 79 in FY2025) illustrates NSE's position as India's primary capital formation venue. As these non-volume streams grow as a share of revenue, NSE's P&L becomes progressively less sensitive to SEBI derivative regulation changes.

How Does It Compare to Peers?

NSE has exactly one domestic listed peer: BSE Limited, itself a stock exchange. No other directly comparable exchange group is listed in India. International exchange peers (CME Group, ICE, LSEG, Deutsche Borse, HKEX) are listed in their own or other international markets and operate in very different regulatory and market contexts.

Metric	NSE (FY2026)	BSE Ltd. (FY2026)	Notes
Revenue from Operations (Rs. Mn)	1,66,013.09	48,339.50	NSE is 3.4x BSE by revenue
Face Value (Rs.)	Rs.1	Rs.2
Basic / Diluted EPS (Rs.)	41.62	60.61	BSE higher EPS but on smaller revenue base
RONW %	33.21%	45.00%	BSE's RONW aided by smaller equity base
NAV per Share (Rs.)	Rs.1,29.75	Rs.1,63.60	NSE has higher absolute net worth
P/E Ratio	[●]: TBD	66.67x	Industry High = Low = Composite = 66.67x (sole peer)
Cash Market Share	92.99%	~7.01%	NSE's structural moat
Equity Futures Market Share	99.79%	<0.21%	Near monopoly
At 66.67x on FY2026 EPS Rs.41.62	Rs.2,774 / share	Reference	Implied market cap: ~Rs.6.87 trillion (~US$72.6 Bn)
At 50x (normalisation discount)	Rs.2,081 / share	Reference	Implied market cap: ~Rs.5.15 trillion
At 80x (structural premium)	Rs.3,330 / share	Reference	Implied market cap: ~Rs.8.24 trillion

The peer comparison is structurally limited but analytically revealing. BSE's P/E of 66.67x is the only domestic benchmark. NSE's revenue is 3.4x BSE's; NSE's derivatives monopoly (options, futures, currency) is unassailable at present. The pricing debate will hinge on one question: are FY2026's regulatory headwinds a temporary dip (implying FY2027 recovery) or a new structural volume ceiling? If the former, forward EPS normalises toward Rs.45-50 and the 66.67x multiple implies Rs.3,000+ per share.

If the latter, investors applying a 50x normalised P/E might anchor to Rs.2,000-2,200. The realistic IPO price band is likely to be set between Rs.2,200 and Rs.3,000, with the final price determined by institutional book building. At any plausible price in this range, NSE's implied market capitalisation of Rs.5-7.5 trillion positions it among India's top 5-7 most valuable listed companies.

Key Risks

l  SEBI regulatory risk on equity derivatives directly cut FY2026 revenue, and more tightening is coming: SEBI's cascading regulatory changes during FY2025-26, restricting weekly expiries to one per exchange (November 2024), moving NSE expiry to Tuesday (September 2025), increasing minimum contract sizes, mandating upfront option premium collection, and imposing additional margin requirements on short options near expiry, directly caused the FY2026 equity futures and options volume decline.

The Union Budget FY2027 has further increased STT on equity futures from 0.02% to 0.05% of contract value and options premium STT from 0.10% to 0.15%, effective April 1, 2026. Each incremental friction reduces participation by retail speculators and high-frequency traders, the primary volume drivers. If speculative activity continues to be curtailed by successive regulatory changes, transaction charges (78.65% of revenue) will face sustained headwinds. NSE cannot meaningfully resist regulation, as the 'first level regulator' it must implement SEBI's directives.

l  Pending SEBI legal and enforcement matters, Rs.13,912 million provisioned in FY2026, final outcomes uncertain: NSE has been subject to significant regulatory enforcement actions. In FY2026, the company provisioned Rs.13,912.07 million in connection with settlement applications filed with SEBI relating to the Colocation WTM Order, Colocation AO Order, Dark Fibre WTM Order, and Dark Fibre AO Order, all related to alleged preferential access to the colocation facility and dark fibre infrastructure by certain trading members in past years.

In FY2025, Rs.6,430.53 million was paid in the TAP (Trading Access Point) matter. Total SEBI settlement fees over FY2024-FY2026: approximately Rs.22,044 million. If SEBI rejects the settlement applications or imposes additional penalties, further material charges may arise. These matters also carry reputational risk as NSE prepares for its public listing.

l  100% OFS with no proceeds to NSE, multiple large sellers with different exit timelines: Every rupee raised flows to Selling Shareholders, not NSE. Post-lock-in period, these institutions (SBI, BoB, CPPIB, GIC, insurance companies) may continue selling in the secondary market, creating sustained supply overhang. CPPIB's weighted average acquisition cost was Rs.324.13 per share, implying a 7-9x return at expected prices, giving PE-style motivation for rapid exit. Unlike promoter-held companies where the founder's stake provides price support signal, NSE's dispersed institutional shareholders have purely financial exit objectives.

l  Transaction charges are 78.65% of revenue and are highly correlated with equity market volumes: When SEBI tightens derivatives rules, volumes fall and NSE's revenue falls in direct proportion. When global risk sentiment turns negative, domestic retail investors reduce activity.

When currency derivatives volumes decline (RBI's January 2024 restrictions on currency futures required use only for hedging), that segment's income declines. Revenue visibility is limited because it depends on regulatory policy, macroeconomic conditions, and investor sentiment, none within NSE's control. FY2025 was an exceptional volume year; FY2026 demonstrated how quickly revenue can fall when regulatory conditions tighten.

l  'No identifiable promoter' creates governance ambiguity for the world's largest equity derivatives exchange: NSE functions simultaneously as a for-profit company and as a 'first level regulator'. Without a promoter, governance rests with the Governing Board, whose composition is regulated by SEBI.

The colocation and dark fibre controversies arose from governance failures in managing access to critical market infrastructure. Post-listing, with public shareholders able to freely trade, NSE's Governing Board will face heightened scrutiny and any governance lapse will be immediately visible in the stock price. There is no controlling shareholder to enforce accountability.

l  FY2026 PAT declined 15.4% to Rs.1,03,020.61 million, investors must model normalised earnings carefully: The combination of regulatory volume headwinds and large SEBI settlement fee provisions makes FY2026 a difficult base year. Reported EPS of Rs.41.62 reflects: (a) lower transaction charge income due to SEBI derivative restrictions; (b) a Rs.14,315.57 million SEBI settlement fee charge (up from Rs.6,701.84 million in FY2025); partially offset by (c) near-zero Core SGF contribution (Rs.5.76 million vs Rs.2,340.89 million in FY2025).

Each of these items has a different forward trajectory, making accurate FY2027 earnings forecasting highly sensitive to assumptions about regulatory normalisation and the resolution of pending SEBI matters.

l  BSE competition at the margin, SME platform and derivatives product innovation: BSE has been growing its SME Emerge platform rapidly (163 SME IPOs in FY2025, more than NSE's 111 in FY2026). BSE's Sensex Options contract has been growing. While NSE's core equity franchise appears structurally secure, BSE's aggressive product innovation represents a competitive vector that could erode market share in selected segments.

l  Technology resilience risk, 12-14 billion messages processed daily, peak 21.89 billion in a single day: The February 24, 2021 trading halt led to a SEBI inspection and subsequent Rs.403.50 million settlement payment. With 200,000+ trading terminals connected across 1,400+ cities, any significant technology outage during high-volume periods damages NSE's reputation as a reliable marketplace and invites regulatory scrutiny.

l  New Labour Code exceptional item, Rs.1,264.41 million past service cost in FY2026: NSE booked an exceptional charge for additional gratuity provision under the new Labour Code notified on November 21, 2025. As the new Code is implemented across operations, employee benefit costs may rise structurally, creating incremental P&L pressure beyond normal salary inflation.

l  Large SEBI regulatory fees as a percentage of revenue, SEBI fees tied to notional turnover of equity options: NSE paid Rs.7,963.50 million in SEBI regulatory fees in FY2026. While this declined due to lower options notional turnover (options SEBI fees are computed on notional value), any recovery in speculative options volumes in future years will proportionally increase this cost line.

Positives

l  33-year operating history and the world's most active equity derivatives exchange, structural, compounding moat: NSE has been the largest Indian exchange by cash market turnover since Fiscal 2001 and the world's largest exchange by equity derivative contracts since well before this IPO. Network effects compound the moat, every new investor makes the exchange more liquid, every new listing expands the investable universe, every new data service benefits from a larger dataset. This is an extraordinarily difficult competitive position to dislodge.

l  129.09 million Unique Registered Investors, 26.93% CAGR from 30.87 million in 2020, spanning 99%+ of India's postal codes: India's equity market investor base is in the early stages of a structural financialisation wave. With India's 750+ million working-age population and rising digital and financial literacy, the runway for investor base growth is multi-decade. Every new registered investor creates a new permanent source of incremental volume for NSE, and these investors were added at 26.93% CAGR even before the IPO's brand visibility effect.

l  Operating EBITDA margins of 67-74% and PAT margins of 51-64%, among the highest of any listed exchange globally: Exchange businesses are among the most profitable business models in financial services. At 66.85% Operating EBITDA margin in FY2026, a regulatory headwind year, NSE demonstrates the resilience of its cost structure. Fixed costs (technology, people, premises) are largely stable while incremental revenue requires minimal additional expenditure. As India's capital markets grow, NSE's margins are structurally positioned to expand.

l  Zero debt + Rs.6,47,712.81 million own treasury investments + Rs.86,625 million dividend in FY2026 alone: NSE has no borrowings and has never needed external debt. Its own surplus treasury investments of Rs.64,771 crore (FY2026) represent accumulated retained profitability. The company paid 84% of FY2026 total PAT as dividends before it was even listed, a remarkable capital return track record that public investors will now participate in.

l  Non-volume-linked revenue growing structurally, diversification reducing regulatory sensitivity: Licensing services (+26.0% in FY2026), data centre racks (+32.9%), data feed & terminal (+15.5%), and listing services (+12.3%) all grew despite the derivatives volume decline. As Nifty-linked passive fund AUM grows, NSE's licensing fee compounds. As more companies list, listing fee income grows. As more members need colocation, rack revenues compound. These structural streams provide an earnings floor that exists independent of SEBI's derivatives policy stance.

l  SEBI-approved coal trading exchange, new market infrastructure creation: NSE received SEBI approval in April 2026 to establish a dedicated national-level coal trading exchange, in which NSE will hold a majority stake. India consumes approximately 1 billion tonnes of coal annually, the world's second-largest consumer. Bringing price discovery, standardised contracts, and electronic settlement to what is currently a largely unorganised market could replicate NSE's capital markets success in commodity markets. This is a meaningful growth option that is not yet reflected in current valuations.

l  India's nominal GDP projected to reach US$4.58 trillion by FY2028, making India the world's 4th-largest economy: NSE is structurally positioned as the primary financial intermediation platform for India's economic growth. Cash market turnover has grown from Rs.49.77 trillion (FY2016) to Rs.280.26 trillion (FY2026), a 5.6x increase in 10 years, driven by GDP growth, financialisation, and digital onboarding. The Indian cash market is projected to grow at 14-16% CAGR to FY2030. NSE captures value from every rupee of this growth through transaction charges.

l  Dividend track record, Rs.80/share (pre-bonus, FY2024), Rs.90/share (FY2025), Rs.35/share (post-bonus, FY2026 incl. special): NSE has consistently returned capital to shareholders even as a private company. Post-listing, with public market accountability, the dividend policy is likely to remain generous. At the indicative price of Rs.2,774/share and FY2026 dividend of Rs.35/share (post-bonus), the indicative dividend yield is approximately 1.26%, but growing dividends as earnings normalise in FY2027 will make the yield increasingly attractive.

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