NSE Q3 Results: Profit Jumps 22% On Protean Stake Sale, Revenue Falls As Volumes Decline

The National Stock Exchange of India Ltd. reported a 22% quarter-on-quarter increase in its bottom line due to a one-time gain of Rs 1,155 crore even as revenue fell 4% in the same period for the quarter ended Dec. 31.

The company, which is eyeing an initial public offering, also saw its operating profit rise 2% on the quarter to Rs 3,398 crore. The margin of the operating earnings before interest, taxes, depreciation, and amortisation rose to 78% from the previous quarter's 74%.

The consolidated revenue from transaction charges for the third quarter stood at Rs 3,445 crore, a sequential decline of 4%. This was mainly due to a reduction in volumes across cash market and derivatives segment, NSE said.

To put things in perspective, the Indian market regulator, SEBI, in a bid to curb excessive speculation in equity derivatives, proposed new measures in July 2024, including increasing the lot size and mandating the upfront collection of option premiums from buyers by trading members and clearing members.

Due to a fall in volumes, the exchange's trading revenue fell 2% to Rs 3,975 crore while clearing revenue fell 16% to Rs 641 crore on a sequential basis.

NSE's profit saw a 22% increase despite a modest 2% growth in operating Ebitda mainly on the back of the one-time gain of Rs 1,155 crore through the sale of its entire 20.3% stake in Protean e-Gov Technologies Ltd.

In the September quarter, the exchange also had a writeback of Rs 426 crore as contribution, net of provision reversal, to the its core settlement guarantee fund. The core settlement guarantee fund is maintained by NSE Clearing to ensure that trades are settled on time. It is used to fulfill obligations of a clearing member who fails to settle on time. 

NSE Q3 Highlights (Consolidated, QoQ) 

• Revenue fell 4% to Rs 4,349 crore versus Rs 4,510 crore.

• Operating Ebitda rose 2% to Rs 3,398 crore vs Rs 3,344 crore.

• Operating Ebitda margin rose to 78% versus 74%.

• Net profit rose 22% to Rs 3,834 crore vs Rs 3,137 crore.

The bourse's cash market trading segment recorded an average daily traded volume of Rs 1.04 lakh crore in the December quarter, which marked a sequential decline of 19%. Similarly, the ADTV for equity futures segment over the same period fell 15% quarter-on-quarter to Rs 1.72 lakh crore, while the ADTV for equity options dropped 7% to Rs 61,295 crore.

Earlier, BSE Ltd.-promoted market infrastructure institution Central Depository Services India Ltd. had also said that low retail participation in the secondary market and regulatory changes in the derivatives segment was hurting transaction-making ability.

As the trend of MIIs hurting from reduced volumes continues, all eyes will now be on BSE, which is set to declare its third quarter earnings on Feb. 6.