NSE shares get 'Buy' ahead of Q2 results today; here's price targets

Ahead of its maiden quarterly earnings today, National Stock Exchange Ltd (NSE) has received a 'Buy' recommendation from Equirus Securities with a target price of Rs 2,150, implying a 21 per cent potential upside. Another brokerage Morgan Stanley has initiated overweight stance on the stock ahead of the earnings of India's largest bourse by volumes. It has a price target of Rs 2,315 on the stock.

The brokerage finds NSE a strong play on India's growing capital markets, combining exposure to the financialization of household savings and the asset allocation shift to equities with dominant liquidity, scalable technology and attractive economics.

"This should sustain premium valuations, we believe," said Morgan Stanley.

The brokerage said strong CAGR trumps cyclicality: NSE has delivered a normalized profit CAGR of 19% over the past 14 years and 25% over the past 10 years.

The brokerage expects revenue and normalized PAT CAGRs of 15% over F27e-F29e, inflecting higher from a tepid 6% normalized PAT CAGR over F24-F27e.

Morgan Stanley expects market share in index options to stabilise. "We see opportunities for revenue diversifications but timing and quantification remain tough to predict," said the global brokerage.

 "Our Sep-27 price target implies 41x Sep-28 P/E (vs 36x NTM P/E at current price), supported by peer valuations and a DCF assuming a 15% 15-year PAT CAGR. Risks include a fall in trading revenues, adverse regulation and market share loss," added the brokerage.

Global investment bank Jefferies has initiated coverage on NSE stock with a 'Buy' rating and a target price of Rs 2,085 apiece.

Indian exchanges offer a hedge against volatility, the global investment bank said, adding that NSE's dependence on options is overstated. New opportunities are underappreciated but offer upside, Jefferies said.

Macquarie too has a bullish stance on the NSE stock. The global brokerage suggested an 'Outperform' rating on the stock with a target price of Rs 1,965.

PL Capital has an 'Accumulate' rating on the NSE stock with a target of Rs 1,950, while Emkay Global has a 'Buy' rating with a target of Rs 2,050. Asian Markets Securities has a target price on the scrip at Rs 2,170.

Meanwhile, the NSE stock was trading 2% higher at Rs 1814.50 today ahead of Q2 earnings. Market cap of NSE rose to Rs 4.49 lakh crore.