NSE stock listing a multi-year opportunity in capital markets: Emkay Global

NSE stock listing: Brokerage Emkay Global has said the National Stock Exchange (NSE) represents a multi-year opportunity in India’s capital markets, backed by the country’s long growth runway in wealth creation and financialisation. Its positive view on NSE rests on India’s capital market development story, the exchange’s resilient leadership across business segments, and the strong profitability and cash generation of market infrastructure institutions such as stock exchanges.

The brokerage said India’s journey in per capita GDP from around $3,000 to $10,000 over the coming decades could support further expansion in capital markets. It forecast NSE to deliver around 13 per cent EPS CAGR over FY27-29E, after a strong 19 per cent CAGR over FY22-26, as regulatory changes drive consolidation in market activity. Given its brand, leadership position, profitability and cash generation, Emkay Global said there is a strong case for NSE shares to be part of every India-focused equity portfolio.

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NSE’s leadership is secured by a self-reinforcing liquidity flywheel across cash and derivatives. In the cash segment, it said, NSE holds around 93 per cent market share and retains a near-monopoly in equity futures and stock options. While BSE has gained market share after its derivatives relaunch, the brokerage said index options appear to be moving towards stabilisation after several regulatory rejigs. It added that secular domestic financialisation and under-penetration give NSE a multi-year structural runway, supported by rising household savings, record SIP flows and continued capital formation.

On the business model, Emkay Global said market volatility, regulatory evolution and technological disruption are part of the exchange business, but added that NSE has shown over decades that it can sustain profitable growth through changing conditions.

It said the exchange’s network effect and diversified revenue streams provide enough levers to adjust to shifts in the regulatory and macroeconomic landscape.

The brokerage also said that despite concerns over derivatives turnover, growth in Indian and NSE derivatives turnover in recent years has been similar to that seen in the US. In a scenario where transaction volumes moderate, it said growth in non-transaction revenue, along with changes in transaction charges, can still support profitable growth.

Emkay Global said NSE has delivered around 24 per cent revenue CAGR and 26 per cent PAT CAGR over FY21-26, driven by strong growth in the derivatives segment. It expects the exchange to post around 12 per cent revenue CAGR over FY27-29E, translating into about 13 per cent EBITDA and PAT CAGR.

The brokerage initiated coverage with a Buy rating and a September 2027 target price of Rs 2,050, which implies a September 2028 estimated price-to-earnings multiple of 38 times.

Financialisation and the formalisation of savings are reshaping India’s macroeconomic landscape and the capital markets industry. It said households are moving away from physical assets such as real estate and gold, as well as low-yielding deposits, towards organised, market-linked financial instruments.

According to the note, Digital Public Infrastructure, easier digital onboarding, regulatory oversight and improving financial literacy are widening market participation beyond metropolitan centres into Tier II and Tier III cities. It said household allocations to equities and mutual funds rose from about 16 per cent of financial assets in FY19 to around 23 per cent in FY25, helping deepen markets, broaden liquidity and strengthen the financial ecosystem. Emkay Global said these trends, along with NSE’s market position and earnings profile, support its positive view on the exchange.