Global investment bank Jefferies has maintained its 'Buy' rating on NSE with a price target of ₹2,085, implying an upside of approximately 17% from current levels. The brokerage believes the National Stock Exchange of India combines market leadership, structural growth, diversification and a natural hedge against volatility. As per Jefferies, the investment bank expects the exchange to benefit from its dominant market position across cash equities, equity options, equity futures, and clearing and settlement. The brokerage notes that NSE currently trades at 34 times estimated FY28 earnings per share (EPS), representing an 18% discount to BSE's valuation, though Jefferies values NSE at a premium of approximately 15% to its fair value for BSE based on greater diversification, higher optionality, higher dividend yield, and structurally higher margins. Jefferies' target price of ₹2,085 is based on 35 times estimated December 2028 earnings, reflecting confidence in the exchange's long-term prospects.
According to Jefferies, India has seen an approximately 4x increase in direct equity investors since the COVID-19 pandemic, led by younger cohorts, yet penetration remains at only 3% of the population, much lower when compared to 18% in China. The brokerage expects the exchange to deliver a 15% revenue CAGR over FY27-29, supported by structural tailwinds and new business opportunities. Jefferies notes that exchanges offer a volatility hedge, as revenue is positively correlated with the VIX, given that options revenue is premium-based, unlike that of global peers. The investment bank calls NSE a "market leader with new growth optionality" and expects the exchange to sustain healthy growth despite past regulatory challenges. Growing equity participation remains another lever for NSE, with expectations that the growing incomes of younger cohorts, combined with wealth transfer from previous generations, could result in an increase in frequency of investing in equities and in ticket sizes over the medium term.
According to Jefferies estimates, NSE's revenue is projected to grow at a 15% CAGR over FY27-29, with the company generating ₹16,600 crore in FY26 compared to ₹17,100 crore in FY25. The brokerage expects revenue to increase to ₹17,400 crore in FY27, ₹19,800 crore in FY28 and ₹23,000 crore in FY29. Adjusted EBITDA is projected to rise from ₹12,700 crore in FY26 to ₹18,000 crore in FY29, with margins expanding by around 200 basis points to 78% by FY29. Adjusted EPS is expected to increase from ₹43 to ₹62 over the same period, supported by stronger revenue and operating leverage. The brokerage expects EBITDA margin to expand by 200 basis points to 78% by FY29 due to benefits from investments in employees and technology over the last 3 years, revenue growth improving over FY27-29, and scale-up of new businesses. Operating revenue CAGR was 6% between FY24-26, as NSE's equity F&O business was adversely impacted by regulatory changes and higher taxes, but these are now largely in the base.
According to Jefferies estimates, technology infrastructure revenues, which accounted for 8% of FY26 revenues and face lower AI risk, could rise to 11% by FY29 as the company adds more colocation racks. These services could increase revenue from activities that are less directly tied to transaction volumes, supporting profitability alongside stronger core revenue. New businesses including commodity derivatives, electronic gold receipts (EGRs), and mutual fund order processing could generate combined revenue of ₹2,242 crore by FY30. The brokerage projects commodity derivatives to reach ₹859 crore, EGRs to contribute ₹1,260 crore, and mutual fund order processing to add ₹123 crore by FY30. Additionally, Jefferies notes that commodity F&O, the new mutual fund ordering platform and EGRs could add another 15% to revenue and PAT by FY30, though these opportunities are not part of the base case. NSE is also exploring opportunities in corporate bond futures, GIFT City and Market Lens. "We are particularly optimistic about the commodity F&O opportunity, the new mutual fund ordering platform, and the recently launched Electronic Gold Receipts (EGRs)," said Jefferies as they could create an additional c.14% revenue and PAT opportunity for NSE by FY30e.
NSE shares were trading at ₹1,770 apiece, following Jefferies' positive initiation of coverage, with the brokerage expecting a 17% upside from current levels. The global investment firm's 'Buy' rating and ₹2,085 target price have provided a boost to investor sentiment, with the exchange positioned for strong earnings expansion driven by diversified revenue streams and structural market growth. Jefferies believes the exchange's diversified business profile and ability to benefit from market volatility provide additional support to its growth outlook, with the brokerage expecting NSE to sustain healthy growth despite regulatory challenges. The positive market response reflects investor confidence in NSE's market leadership, structural growth opportunities, and potential earnings expansion through new business initiatives. Contrary to popular perception that NSE story is tied closely to equity options, global brokerage Jefferies disagrees as it expects segment contribution to decline from 60% of FY26 revenue as new products scale up, with equity options share in transaction revenues to fall to 50% from the current 60% over the next 5 years.
