3 hrs ago
NSE Shares Rise After Listing as Brokerages See Growth Runway
NSE is India’s main stock exchange, and its shares began trading after an initial public offering.
The shares started only slightly above their issue price but rose about 5% on the first day.
Two brokerages gave positive views on the company.
Emkay Global said investors could benefit from India’s growing use of stocks and mutual funds.
PL Capital also expected growth but gave a lower price target.
NSE handles most cash-market trading and almost all futures trading in India.
However, its share of index-options trading has fallen.
New rules, changing trading volumes and competition from BSE could create challenges.
The brokerages believe NSE’s strong position and other sources of income can help it continue growing.
NSE shares listed at a 0.84% premium to the Rs 1,785 issue price and rose about 5% on Day 1.
Emkay Global initiated coverage with a Buy rating and a Rs 2,050 September 2027 target price.
PL Capital began coverage with an Accumulate rating and a Rs 1,950 target price.
NSE holds about 93% of India’s cash-market share and nearly all futures volume, but its index-options share has declined.
Brokerages cited financialisation, rising savings and diversified revenues as growth drivers, while warning about regulation and slower derivatives volumes.
- Who
- The National Stock Exchange of India, Emkay Global and PL Capital.
- What
- NSE shares began trading, while brokerages issued bullish or moderately positive coverage and price targets.
- Where
- India’s stock market and capital-markets industry.
- When
- On the stock’s first trading day; forecasts cited in the reports cover FY27-FY29 and FY29.
- Why
- Brokerages cited NSE’s dominant market position, expanding financialisation, rising household investment and the exchange’s ability to adapt to regulatory and market changes.
Brokerage Growth Case
Risks and Constraints
Market leadership
Brokerage Growth Case
Emkay Global said NSE’s liquidity network effect supports dominant positions in cash and derivatives, including about 93% cash-market share and a near-monopoly in equity futures and stock options.
Risks and Constraints
PL Capital said NSE’s index-options share has fallen sharply, while BSE has gained share following the relaunch of its derivatives business.
Future earnings
Brokerage Growth Case
Emkay Global expects financialisation, rising household savings, SIP flows and broader participation to create a multi-year growth runway.
Risks and Constraints
PL Capital expects slower revenue growth through FY29 because regulatory changes and the shrinking index-options share could reduce industry volumes.
Derivatives dependence
Brokerage Growth Case
Emkay Global said non-transaction revenue growth and changes to transaction charges could support profitable growth if trading volumes moderate.
Risks and Constraints
Both the decline in index-options share and regulatory curbs on weekly expiries, closing auctions and proprietary trading could weigh on future derivatives-related growth.
Key facts
- Issue price
- Rs 1,785 per share
- Listing performance
- Listed at a 0.84% premium and rose about 5% on Day 1
- Emkay Global view
- Buy rating; Rs 2,050 September 2027 target price
- PL Capital view
- Accumulate rating; Rs 1,950 target price
- Cash-market share
- About 93%, according to Emkay Global
- Index-options share
- 65% in FY27 so far, down from 72% in FY26 and about 97% in FY24, according to PL Capital
- Emkay growth forecast
- About 12% revenue CAGR and 13% EBITDA and PAT CAGR during FY27-FY29E
Quotes
Emkay Global
Domestic brokerage that initiated coverage on NSE with a Buy recommendation.
“Strong profitability and cash generation by MIIs (market infrastructure institutions), such as stock exchanges, enable them to globally command higher valuation multiples versus other capital market players that are more fragmented and susceptible to competition.”
financialexpress.com
“We expect EBITDA margin to recover to 76% by FY29 (vs. 71% in FY26) as one-offs get adjusted, in-line with annual profit growth of 11% on a compounded basis. NSE’s IPO values it at Rs 4.4 trillion, with P/E of 32x on FY29 earnings estimates.”
financialexpress.com
Sources
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