National Stock Exchange (NSE) Overview and Key Details:
Business Overview:
NSE, established in 1992, is India's largest stock exchange and among the top global exchanges by trading volume. It provides integrated trading, clearing, settlement, and surveillance services across equities, futures and options, debt, and currency markets. NSE's indices include Nifty50 and Nifty Bank, among others. It also has ancillary businesses such as data analytics, co-location services, investor education, and index licensing. The exchange commands over 90% market share in equity derivatives and is known for its tech-first approach and zero-leakage infrastructure.
Investment Rationale:
The investment rationale highlights NSE's market leadership as a monopoly in equity derivatives and top player in equities. It mentions its financial strength, with over ₹8,000 Cr PAT and 70%+ EBITDA margins. The potential for an upcoming IPO in FY25-26, a regulatory moat due to SEBI regulation, and a tech edge based on automated and scalable infrastructure are also highlighted.
Key Risks:
Potential regulatory challenges include SEBI investigations into co-location and governance. New SEBI guidelines in Nov-24 on FNO trading might also impact trading volumes and revenue. There is also a risk of IPO delay pending clearance from SEBI, limited liquidity pre-IPO, and potential valuation pressure due to current IPO optimism.
IPO Timeline & Exit Options:
The IPO was deferred due to governance issues and a SEBI probe. Governance structure is improving, suggesting a potential IPO in FY26. Exit options include private secondary transactions, institutional buybacks, and pre-IPO placements.
UnlistedZone View:
NSE represents a compelling unlisted investment opportunity due to its market monopoly, consistent profitability, and cash-rich operations. Even with regulatory uncertainties, its fundamentals are solid. At approximately 48x P/E (FY24E), NSE presents better value compared to BSE, making it an attractive investment.
Financials and Valuation:
In FY24, NSE reported revenue of ₹14780 Cr, EBITDA of ₹11611 Cr, and PAT of ₹8406 Cr. EPS stood at ₹169.82. The last deal price as of April 24, 2025, was ₹1,625/share, implying a market cap of ₹4.02 Lakh Cr. Its P/E ratio (TTM FY24) is ~47.85x, which is a discount to its listed peer, BSE Ltd (P/E 93.8x). Revenue grew at a 38%+ CAGR from FY21-FY24, with strong operating margins and minimal debt.
Shareholding Pattern:
The shareholding pattern is as follows: Foreign Holding (36.45%), Insurance Companies (19.35%), Individuals (16.20%), Corporates- Unlisted (15.47%), Financial Institutions/Banks (4.57%), Venture Capital Fund/AIFs (3.65%), Others (2.72%), and Corporates-Listed (1.58%).
Disclosures:
Information comes from MCA ROC filings, management presentations, and media reports. UnlistedZone & affiliates may have holdings in NSE. This report is for informational purposes only and is not investment advice. Investors should conduct their own due diligence.
