Whalesbook
Strong Quarter Outshines Full-Year Dip
The National Stock Exchange (NSE) reported a strong operational performance for the March quarter of FY26. Net profit rose 8% year-on-year to ₹2,871 crore, supported by a 32% surge in revenue to ₹4,968 crore. The main driver was a 39% increase in transaction fees, totaling ₹4,077 crore, fueled by higher trading volumes in cash and derivatives markets. Operating EBITDA grew 30% to ₹3,633 crore.
Full-Year Performance and Costs
This quarterly performance contrasts sharply with the full fiscal year 2026 results. For the year ending March 31, 2026, NSE's net profit fell 15% to ₹10,302 crore and revenue decreased 3% to ₹16,601 crore. The annual dip is partly due to slower market activity and regulatory changes impacting derivatives trading. Expenses also rose 32% to ₹1,486 crore in the quarter, contributing to a slight margin contraction to 73% from 74%.
Market Context: Peers and IPO Preparations
In the broader market, NSE maintains its dominant position over peer Bombay Stock Exchange (BSE). The BSE reported strong Q3 FY26 results, but its stock trades at a high Price-to-Earnings (P/E) ratio. NSE is valued around ₹4.7 lakh crore pre-IPO, with valuation expectations for its offering between $65 billion and $75 billion. Global exchanges like Intercontinental Exchange (ICE) and London Stock Exchange Group (LSEG) also posted strong quarters. The Indian IPO market is becoming more selective, with many recent listings trading below their offering price, highlighting a preference for profitable companies. NSE's planned IPO is expected to be one of India's largest.
Regulatory Issues and Full-Year Performance
NSE continues to address legacy regulatory issues. In the March quarter, it set aside ₹84 crore for co-location and dark fibre case settlements, with revised terms of ₹1,491.21 crore submitted to the Securities and Exchange Board of India (Sebi). These cases have led to substantial provisions, including a ₹643 crore penalty settlement in October 2024. Sebi's IPO approval requires full disclosure of these matters, but the settlement process is not expected to delay the listing.
The full-year earnings decline for FY26 underscores a slowdown in core business growth, occurring as the IPO market becomes more discerning. NSE's role as a key facilitator of market activity is evident in the ₹48,345 crore it contributed to the exchequer through Securities Transaction Tax (STT) and Commodities Transaction Tax (CTT) in FY26, highlighting its importance and ongoing regulatory oversight.
IPO Moves Forward
NSE is moving ahead with its IPO plans, aiming to file its draft red herring prospectus by June 15, 2026, for a listing later in the year. The exchange has secured regulatory nod and is resolving outstanding matters. With a projected valuation of $65 billion to $75 billion, its IPO is set to be significant. Growth in India's financial sector is expected to boost investor participation and trading volumes for NSE.