From valuation comfort to BSE comparison: 7 questions about NSE IPO answered

Reports coming in for today mention that As the mega NSE IPO opens later the current week, an market observer answered various questions related to it — from valuation comfort to the exchange's comparison with its listed peer BSE.

The entire IPO is an offer for sale (OFS), meaning existing shareholders are selling their NSE shares to public market participants. The NSE itself is not issuing any new equity and, as a result, will not receive the IPO proceeds. The money boosted will accrue to the shareholders whose shares are sold in the offer, after applicable offer-related expenses. At the upper end of the Rs 1,700-Rs 1,785 price range, the offering is valued at around Rs 22,562 crore, with the NSE seeking a market capitalisation of roughly Rs 4.42 lakh crore. The IPO comprises up to 12.64 crore equity shares, equivalent to around 5.2% of the NSE's equity capital. The offering opens for subscription on September 17 and closes on September 21.

Prasenjit Paul, Fund Manager at 129 Wealth & Head of Research at Paul Asset weighed on the following questions:

1. Is the Rs 4.42 lakh crore valuation justified, given NSE’s dominant position? What metrics should market participants use?

NSE is a fundamentally firm business with a clear competitive advantage, but the price still needs earnings backing. At Rs 1,785, it is valued at around 43 times its noted FY26 earnings of Rs 41.62 per share, below BSE’s valuation multiple. On that basis, the valuation looks justified—not cheap, but not expensive either. Market participants should focus on earnings and the sustainability of expansion, rather than market leadership alone.

2. Where can NSE’s next phase of expansion come from when further market-share upside may be difficult?

NSE does not have to keep gaining market share to grow. A bigger overall capital market can do a lot of the work. It had 13.24 crore registered market participants by June 2026, though what matters more is how many of them participate actively. Deeper cash-market activity, new products, index licensing, data services and GIFT City could provide steady expansion opportunities over several years.

3. Does the Rs 1,700–Rs 1,785 price range offer genuine comfort compared with unlisted prices of Rs 2,000–Rs 2,100?

At the upper end of the band, the offer is roughly 11–15% below that unlisted price range. That provides some comfort, but a discount to somebody else’s purchase price does not automatically make a stock undervalued. Off-market quotes are only indicative and may carry some scarcity premium. The better reference point is what the earnings justify, not just where the shares changed hands earlier.

4. How much regulatory risk should market participants factor into the valuation, especially given NSE’s derivatives exposure?

Regulatory risk should be built into earnings estimates, not treated as just another disclosure. Options transaction fees alone contributed around 60% of NSE’s FY26 operating topline. Changes in participation rules, contract design, margin requirements or trading costs can as a result affect earnings, even without NSE losing market leadership. Before paying a premium, market participants should check whether the valuation still makes sense under weaker options activity.

5. How should NSE be compared with BSE from a valuation perspective?

NSE should not automatically get BSE’s valuation multiple simply because it is bigger. NSE has a larger earnings base and elevated noted operating margins, while BSE has a faster-growing options business and its mutual-fund platform. In Q1FY27, noted earnings grew 62% at BSE, compared with 7% at NSE. The comparison should centre on anticipated earnings after adjusting for one-offs, the business mix and how much of that expansion can be sustained. Size and market share are important, but they are not the full picture.

6. What should market participants monitor after stock-exchange debut?

The focus should be on options premium turnover, cash-market volumes, transaction fees actually earned and recurring earnings—not just the huge notional turnover numbers. NSE’s Q1 FY27 normalised operating EBITDA margin was 77.75%, compared with 78.62% a year earlier. So, headline profitability needs a closer look. Market participants should watch whether elevated volumes translate into better earnings after technology spending, and whether data, indices and newer businesses start making a meaningful contribution.

7. What should market participants watch in post-stock-exchange debut trading, and at what valuations would NSE look attractive or expensive?

Below 40 times earnings, NSE would look attractive for a fundamentally firm, cash-generating business with a clear competitive edge. Above 50 times earnings, there needs to be firm visibility on future earnings-per-share expansion to justify the valuation. In post-stock-exchange debut trading, the focus should stay on the price being paid for those earnings. A firm business, yes, but not necessarily an attractive investment at every price.