NSE's growth drivers, market share, IPO launch: What MOFSL says

MOFSL in its latest note on National Stock Exchange (NSE) said the exchange's future growth will be driven by the expansion of electricity derivatives and the introduction of futures contracts across various commodities. Additionally, the potential launch of VIX futures based on market feedback and continuous product development for NSE's international exchange are expected to contribute significantly to growth, MOFSL said adding that such initiatives are part of NSE's strategy to diversify its offerings and tap into emerging market opportunities.

In September 2025, NSE will shift the Nifty expiry date from Thursday to Tuesday. MOFSL estimates this change could result in a 300-400 basis point increase in market share based on premium turnover, potentially counterbalancing short-term volume weaknesses. This strategic shift is anticipated to enhance liquidity and attract more participants, thereby stabilizing revenue streams, it said.

Last heard, the unlisted shares of NSE were quoting at Rs 2,255 apiece in teh unlisted market.

MOFSL said NSE plans to add 200 racks this month, with 189, 189, 93 and 188 racks to be added in August, September, Octoctober and November, totaling 660. These will be added to the 1,200 racks currently operational, taking the total count to ~1,860 racks. The NSE management believes this capacity will be sufficient to meet current demand. Any further rack expansion will depend on future demand and supply dynamics, MOFSL noted.

As per MOFSL, NSE Data and Analytics is engaged in a deal to sell its KRA business through a business transfer arrangement. The transaction is expected to close shortly. Regarding the IPO launch, NSE has replied to all SEBI queries and is awaiting a response, MOFSL said.

For the June quarter, NSE reported 11 per cent fall in operating revenue in Q1. This decrease was primarily attributed to a 14 per cent drop in transaction charges. Despite this, NSE showed a 14 per cent increase in PAT, highlighting gains from higher other income and the absence of contributions to the Settlement Guarantee Fund (SGF), according to MOFSL. The decline in transaction charges, which form a significant portion of revenue, reflects broader market conditions but is offset by strategic financial management.

MOFSL said the revenue mix was dominated by transaction charges, which accounted for 78 per cent, despite declining 14 per cent year-on-year. Income from data centre and connectivity rose by 17 per cent, while operating investment income fell by 10 per cent. 

On the product front, the recent launch of a monthly electricity futures contract is aligned with NSE's strategic direction, with plans to further extend.

For the June quarter, NSE's total expenses increased by 11 per cent year-on-year, with a cost-to-income ratio of 22.4 per cent.  Employee expenses surged 34 per cent due to prior hiring and annual salary increments, while other expenses rose 5 per cent, primarily due to technological upgrades across subsidiaries. The registered investor base expanded to 116 million accounts. The company also faced a settlement expense related to a SEBI inspection report, MOFSL said.

In the equity segment, 33 companies raised Rs 15,080 crore through IPOs on SME and mainboard platforms. Total fund mobilisation for the quarter reached Rs 5.2 lakh crore, with significant contributions to the exchequer from various levies. This included contributions from STT, CTT, and other taxes, which amounted to Rs 143,30 crore.