NSE IPO: Nirmal Bang and Sparks say 'Subscribe', cites structural growth potential

Domestic brokerage firm Nirmal Bang Securities remains positive on the initial public offering (IPO) of the National Stock Exchange of India (NSE), suggesting to subscribe it for long-term. It said that NSE offers a strong long-term valuation proposition, supported by its dominant market position, scale and robust profitability.

However, the brokerage noted that the moderation in options premium volume, which NSE is witnessing a decline in FY26, while BSE has gained traction and is rapidly increasing its share in the options segment, as a key near-term concern. "This competitive shift could weigh on NSE’s transaction revenue growth and warrants a cautious near-term view," it said.

It believes NSE’s strong franchise, significantly larger scale and established market ecosystem provide a solid base to navigate the evolving derivatives landscape. NSE is offered at 35.4 times Q1FY27 annualized P/E, factoring in both its market leadership and the near-term pressure from increasing competition in options. "Given the structural growth potential of Indian capital markets, we assign a “Subscribe” rating with a positive long-term outlook," it said Nirmal Bang Securities.

NSE is eyeing to raise Rs 22,568 crore from its initial stake sale, which is being offered in the range of Rs 1,700-1,785 apiece with a lot size of 8 equity shares and its multiples thereafter. The issue opened for subscription on Thursday, September 17, getting 43 per cent subscription through nearly 12 lakh applications on day one. The issue will close for subscription on Monday, September 21.

In its another report, Nirmal Bang Institutional Equities said that at the upper price band of Rs 1,785, the offer values NSE at 42.9 times FY26 EPS and 13.8 times Mar-26 book value. On a fully normalised basis, stripping out both the SEBI settlement fees and the exceptional gain on the NSDL stake sale, the multiple remains steady at 42.7 times.

While NSE earns a lower statutory RoNW than BSE (33.2 per cent against 45 per cent) and carries a heavier options concentration, these operational headwinds appear to be adequately priced into the offer. At a discount to BSE's 54.6 times multiple, the valuation provides a balanced and reasonable entry point for investors looking to back the undisputed leader in Indian market infrastructure, it said.

However, Nirmal Bang Institutional Equities penciled SEBI intervention in index derivatives, continued share loss in options, and further regulatory or litigation charges as key risks for the company.

NSE is India's largest stock exchange and has held that position in cash market and equity derivatives turnover since FY01. It began operations in Nov-92 and runs a vertically-integrated platform covering listing, trading, clearing, indices, and market data. The offer is a pure offer for sale of up to 12.64 crore shares by existing shareholders. The shares shall be listed on BSE Ltd on September 24.

Spark's Midas Equities & Research said that NSE is regulated near-monopoly on India's market infrastructure, while the regulation has reset near-term volumes, not the franchise. It has a 'subscribe' rating for the issue based on its near-monopoly status, integrated stack, debt free status, solid cash flow and potential growth prospects of Indian capital markets.