- NSE IPO valuation at Rs 1,785 values it around Rs 4.4 lakh crore, 41x FY26 earnings
- Valuation seen as fair despite regulatory concerns and expected profit decline in FY26
- Broker groups seek changes in Closing Auction Session to boost derivative market volumes
The valuation of the National Stock Exchange (NSE) at its upcoming initial public offering (IPO) is reasonable given its earnings profile, market dominance and growth prospects, according to Nikhil Khandelwal, Chairman and Managing Director of Systematix Group.
Speaking to NDTV Profit, Khandelwal said the issue price of Rs 1,785 per share values NSE at around Rs 4.4 lakh crore, translating into roughly 41 times its FY26 earnings. He said the valuation appears fair despite regulatory overhangs and a decline in profit in FY26.
Khandelwal also highlighted the potential impact of changes to the Closing Auction Session (CAS) framework. He said broker associations are actively engaging with the regulator and are hopeful of changes to address disruptions caused by the current framework.
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According to him, any positive changes or a rollback towards the earlier settlement framework could help derivative and overall market volumes recover. Since NSE has a significant share of earnings linked to the futures and options segment, higher volumes could have a meaningful impact on its future earnings and valuation.
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Comparing NSE with BSE, Khandelwal said BSE has delivered a higher earnings CAGR of around 60-65% over the past three to four years, compared with approximately 45-47% for NSE. He expects BSE's earnings momentum to remain stronger due to the base effect and its growing derivatives business.
However, he said NSE's dominant market share and scale justify a valuation premium of around 30-40% over BSE. He added that regulatory changes in the derivatives segment could have a more material impact on NSE than BSE.
Khandelwal expects NSE to continue compounding profits at double-digit rates and said investors who receive an allocation at the IPO valuation could view the stock from a long-term investment perspective.
He also noted that investors who bought NSE shares in the unlisted market at Rs 2,000-2,200 may need to assess the impact of the IPO valuation and upcoming lock-in expiries on potential supply in the market.
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