Entrenched market leadership with strong network effects

• NSE has been India's largest exchange by cash market turnover and equity derivatives turnover continuously from Fiscal 2001 through Q1 FY27, holding 92.99% share in the cash market and 99.79% in equity futures in FY26. Globally, it ranked as the largest multi-asset class exchange by number of cash equity trades and equity derivative contracts in FY26, with an 11.38% global share in cash equity trades and 51.18% in equity derivative contracts, and has been the world's largest derivatives exchange by contracts traded for seven consecutive years. That scale is backed by genuine distribution depth: 132.37 million unique registered investors spread across over 99% of Indian postal codes as of June 30, 2026, plus 3,005 listed entities carrying Rs 474.08 trillion of market capitalisation, which creates a liquidity flywheel that is very hard for a challenger to replicate.

Vertically integrated, multi-asset platform with diversifying non-trading revenue

• The company runs trading, clearing, listing and data services on one stack, with NSE Clearing Limited (the largest clearing corporation in India, rated AAA by CRISIL since 2008) and NSE Indices Limited, which manages 435 indices including the Nifty 50. Cross-segment margin fungibility lets members deploy capital across cash, futures, options, currency, commodities and debt within a single membership, lowering their funding costs and raising switching costs. Crucially, the non-transaction lines are growing faster than the core: data connectivity went from Rs 8,246.97 million in FY24 to Rs 11,287.91 million in FY26, data feed and terminal services from Rs 3,392.64 million to Rs 4,700.74 million, and listing services from Rs 2,226.18 million to Rs 3,524.36 million, which is slowly reducing dependence on trading charges.

Severe revenue concentration in options, and the options franchise is visibly shrinking

• Transaction charges made up 78.65% of revenue from operations in FY26, of which options alone contributed 60.22%, so a single product line drives the majority of the business. That line is under pressure: equity options market share by premium turnover fell from 96.86% in FY24 to 74.71% in FY26 and further to 68.48% in Q1 FY27, and index options contracts traded declined at a CAGR of 39.14% between FY24 and FY26. The financial effect is already visible, with FY26 revenue from operations down about 3.1% to Rs 166,013.09 million and profit for the year down roughly 15.5% from Rs 121,876.89 million in FY25 to Rs 103,020.61 million, alongside other expenses rising from Rs 26,249.21 million to Rs 37,900.64 million.

Valuations

• Based on the FY2026 financials, the company is seeking a market-to-sales valuation of 26x and a price-to-earnings ratio of 43x. The company operates one of the world's largest exchanges and plays a critical role in the global financial markets. Its diversified presence across cash and derivatives, commodities and debt markets strengthens its position within the financial ecosystem. With a deep and established presence in the country's capital-market infrastructure, we remain positive on the company's long-term growth prospects. We, therefore, recommend subscribing to the issue.