Brokerage house Emkay Global has maintained its 'Buy' rating on the National Stock Exchange (NSE) with a price target of Rs 2,050. The update follows the exchange's second-quarter performance, where net profit grew 23% year-on-year despite short-term revenue pressure caused by accounting standard changes.
Emkay Global Financial has kept its 'Buy' rating on the National Stock Exchange (NSE), setting a target price of Rs 2,050 for the stock. This outlook follows the exchange's performance in the second quarter of the 2027 fiscal year, where the company navigated shifting regulatory and accounting standards.
Quarterly Financial Performance
In the second quarter, the NSE reported a consolidated net profit of Rs 2,578 crore, marking a 23% increase compared to the same period last year. While year-on-year growth remains strong, the total operating revenue for the quarter stood at Rs 4,066.8 crore. This represents a 10.6% growth over the previous year but an 11% decline on a sequential basis.
The sequential revenue dip was largely attributed to a 16% drop in transaction charges, which the company linked to the implementation of new accounting standards. Despite this, the exchange maintained an operating margin of 75.7%, with EBITDA for the quarter reaching Rs 3,079 crore, showcasing the company's ability to maintain discipline in its core operations.
Growth Outlook and Strategic Plans
The brokerage remains optimistic about the exchange’s long-term trajectory, citing the company's dominant market position and potential for continued volume growth. A key area for future expansion is the proposed introduction of corporate bond index futures. This new product is currently awaiting final approval from the Reserve Bank of India. Success in launching such products is viewed as a vital step in diversifying the exchange's revenue streams and attracting more activity from institutional investors.
Risks and Monitoring
While the outlook remains positive, investors should consider certain risks that may influence future performance. The exchange faces inherent volatility in its revenue due to the nature of transaction charges, which can be sensitive to regulatory changes and shifts in market accounting practices.
Furthermore, the NSE has a high dependence on derivatives trading volumes. Any regulatory move aimed at market consolidation or changes in trading rules for derivatives could impact transaction volumes. The timing of new product launches, such as the corporate bond index futures, also remains a critical factor. For shareholders, the most important updates to follow will be the status of pending regulatory approvals and the recovery trend in quarterly transaction charge revenues as the new accounting standards settle.