The National Stock Exchange of India Ltd (NSE) has garnered two new 'Buy' recommendations, marking the 11th and 12th such calls since its listing on September 24. These fresh ratings, from Motilal Oswal Financial Services (MOFSL) and JM Financial, suggest a potential upside of 19-22% from the current share price.
MOFSL has set a target price of Rs 2,300 for NSE, while JM Financial's target is slightly higher at Rs 2,310. Notably, Morgan Stanley holds the highest target among all brokerages, at Rs 2,315. On Monday, NSE shares were trading at Rs 1,934.45, reflecting a 0.20% gain on the BSE.
NSE's Market Dominance and Financial Health
NSE maintains a dominant position in the Indian equity markets, commanding a 93% share of cash equity average daily turnover (ADTO) in FY26. It holds 100% of equity futures and 75% of options premium turnover for the same period. Its clearing arm is responsible for settling 88-91% of the industry's total value, and its Nifty indices underpin a significant portion of index fund and ETF assets.
This strong market presence translates into robust financial performance, with NSE converting its high liquidity into an EBITDA margin exceeding 75%. The exchange also benefits from a debt-free and capital-light balance sheet, according to JM Financial.
Challenges and Growth Outlook
Despite its stronghold, NSE has faced some challenges. The introduction of a single-weekly-expiry framework, increased contract sizes, two hikes in securities transaction tax (STT), and the emergence of a credible competitor in index options have led to a decline in NSE's options premium share. This share fell from 97% in FY24 to 75% in FY26 and further to 68% in FY27TD, with competitor gains concentrated on their specific expiry days.
As a result, NSE's revenue saw a 3% decline in FY26, with JM Financial projecting a further 3% dip for FY27E. However, analysts are optimistic about a rebound. Beyond this reset, growth is anticipated to be broad-based. Cash equities and co-location services, which accounted for 17% of FY26 revenue, are projected to steadily rise to 24% by FY29E.
MOFSL forecasts NSE's revenue to increase from Rs 16,600 crore in FY26 to Rs 23,400 crore in FY29E. EBITDA is expected to clock a 13% CAGR over FY26-29, with margins expanding to 77% by FY29. Profit After Tax (PAT) is projected to reach Rs 15,000 crore, reflecting a 13% CAGR from FY26-29, and Return on Equity (RoE) is anticipated to recover to 43% by FY29 from 30% in FY26.
Structural Headroom for Market Growth
India's market capitalisation-to-GDP ratio stood at 131% in FY25, significantly lower than 216% in the US and 157% in Japan, indicating substantial structural headroom for growth. Demat accounts reached 24.10 crore by September, representing only 17% of the population. India's active participation rate of 3% is also low compared to other emerging markets.
MOFSL highlights that as financial literacy, digital onboarding, and distribution channels improve, investor participation is expected to rise structurally over the coming years. Furthermore, the number of investors aged less than 30 years on NSE's platform grew from 22.6% of its individual investor base in FY19 to 38.4% in FY26, signaling increasing youth engagement.
Other Brokerage Targets
- JPMorgan: 'Overweight' with a target of Rs 2,130.
- Kotak: Target of Rs 2,200.
- Asian Markets Securities, Equirus Securities, Centrum, and Jefferies: Targets ranging from Rs 2,125 to Rs 2,170.