We initiate coverage on NSE with ‘Accumulate’ rating and TP of INR1,950 (35x FY29E P/E). NSE dominates the exchange landscape with over ~93% share in cash market and ~100% in stock and index futures (YTDFY27), supported by strong liquidity, robust technology and a comprehensive product suite. Market share in index options has declined to ~65% (YTDFY27) due to regulatory hurdles; introduction of CAS and prop trading rules has impacted volumes further. While revenue grew at 25% CAGR in FY21- 26, we build a CAGR of 11% over FY26-29E due to shrinking share in index options. We expect EBITDA margin to recover to 76% by FY29E (vs. 71% in FY26) as one-offs get adjusted, in-line with PAT CAGR of 11%. NSE’s IPO values it at INR4.4trn, with P/E of 32x on FY29E earnings. We believe the valuation largely captures the premium.
people’s perception is that NSE is overvalued already-somehow there is no public fancy for stock. It is unlikely to give much profit if bought at this price