Top global and domestic brokerages have expressed a largely positive outlook on National Stock Exchange Ltd (NSE) shares, revising their price targets upwards after the exchange announced better-than-expected results for the September quarter. Analysts anticipate continued growth for India's largest stock exchange, driven by robust trading volumes and strategic operational efficiencies.
Brokerage Outlook and Price Targets
Several prominent financial institutions have reiterated or upgraded their recommendations for NSE, signaling confidence in its future performance. Morgan Stanley maintained its 'Overweight' rating with an unchanged target price of Rs 2,315, suggesting a potential upside of 28% from current levels.
Jefferies recommended a 'Buy' rating, revising its target to Rs 2,125, up from Rs 2,085 previously. Similarly, Macquarie retained its 'Outperform' rating, setting a target of Rs 1,975. JPMorgan also reaffirmed its 'Buy' rating for NSE, citing stronger-than-expected consolidated revenue and operating EBITDA, with a target of Rs 2,130.
New coverage was initiated by Centrum Broking, which recommended a 'Buy' with a target of Rs 2,125, implying an 18% upside. Additionally, 360 One Capital Markets suggested a 'Buy' rating, targeting Rs 2,100 per share. Macquarie noted, "Despite an in-line quarter, we expect the operating environment for capital markets participants to improve as the SEBI adopts a more accommodative stance on CAS and implements reforms to strengthen market-linked products. As a critical provider, NSE should continue to benefit."
NSE's Strong Q2 Financial Performance
For the September quarter (Q2FY27), NSE reported a significant 23% year-on-year (YoY) growth in consolidated profit after tax, reaching Rs 2,578 crore. The exchange's consolidated total income also saw a 9% YoY increase, totaling Rs 4,554 crore.
Operating EBITDA surged impressively by 107% YoY to Rs 3,079 crore, achieving a robust EBITDA margin of 76%. This strong performance was largely attributed to efficient expense management and increased trading activity.
Revenue Highlights:
- Transaction Charges: Revenue from transaction charges grew 9% YoY to Rs 3,035 crore, fueled by higher volumes in the cash market and equity options segments.
- Cash Market ADTV: The average daily traded volume (ADTV) in the cash market segment increased by 24% YoY to Rs 1,18,377 crore.
- Equity Options ADTV: ADTV in equity options (premium value) saw a 3% YoY rise to Rs 47,977 crore.
- Other Income Streams: Revenue from data connectivity charges stood at Rs 267 crore, while operating investment income increased 9% YoY to Rs 237 crore. Data feed and terminal services revenue rose 43% YoY to Rs 165 crore, and listing services revenue soared 70% YoY to Rs 150 crore.
On the expenditure front, consolidated total expenditure for Q2FY27 declined significantly by 51% YoY to Rs 1,161 crore. This substantial reduction was primarily due to a provision of Rs 1,297 crore recognized in the corresponding quarter of the previous fiscal year towards SEBI settlement fees related to colocation and dark fiber matters, which was not repeated this quarter.