After years of waiting, overcoming regulatory hurdles and preparations, the National Stock Exchange of India (NSE) is entering the listed market. Global brokerage house Macquarie has initiated coverage on NSE with an ‘Outperform’ rating and a target price of Rs 1,965. This implies an upside of around 10% from the issue price.
According to the brokerage report, NSE’s dominance in the Indian market, strong profitability and expansion into new products are among the key factors behind its view.
Why does Macquarie call NSE “The Dominator”?
NSE is not just another company entering the stock market. It operates at the centre of India’s trading ecosystem, handling large volumes across different segments.
“We view NSE, India’s largest stock exchange, as “The Dominator”, due to its leading market share and power,” added the brokerage house in its report.
According to the Macquarie report, NSE’s advantage comes from its combination of market share, technology and liquidity.
This means that more trading activity can create a stronger network, which can then attract more traders and market participants.
Macquarie report further noted, “Full set of services, technology stack and deep liquidity make NSE the lynchpin of India’s financialisation.”
Where could the next leg of growth come from?
The brokerage expects NSE’s revenue to grow at a 12% CAGR between FY26-FY30.
But there is an important point here. Macquarie does not expect all of this growth to come from traditional transaction charges.
“Platform expansion to drive revenues,” the report noted.
As per the brokerage house report, non-transaction businesses and new products could become increasingly important. These include areas that can expand the exchange’s revenue base beyond its existing trading activity.
What could push the estimates higher?
Macquarie added, “Upside could come from a higher P/N ratio, growing monthly options adoption, and stronger traction in new products.”
NSE: Is there a near-term concern?
The brokerage also flags some pressure in the near term. The introduction of the Closing Auction Session (CAS) has affected trading activity as investors adjust to the new framework.
“Near-term pressure from CAS, long-term industry outlook still constructive,” the report said.
According to the report, Macquarie expects some pressure on cash equity, derivatives and Margin Trading Facility (MTF) volumes in the near term.
However, the brokerage believes the broader industry outlook remains constructive, supported by increasing financial participation in India.
NSE valuation: Why does Macquarie see room for growth?
NSE is trading at a premium to several international exchanges. Macquarie estimates NSE at around 30 times financial year 2029 expected price-to-earnings (P/E), compared with about 18 times for international peers.
But the brokerage argues that the premium needs to be viewed alongside NSE’s growth and returns.
At its target price of Rs 1,965, Macquarie values NSE at around 32.5 times financial year 2029 expected P/E.
The brokerage also sees potential for further re-rating if new products gain stronger traction.
What investors need to watch
For investors, the key factors to watch will therefore be NSE’s trading volumes, new product adoption, non-transaction revenue growth and the impact of regulatory changes on its core businesses.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.