NSE shares traded largely flat on Wednesday after the exchange reported a 23% year-on-year increase in consolidated net profit to ₹2,578 crore in Q2FY27. According to The Hindu BusinessLine, by 12:30 pm, the stock traded at ₹1,808 compared to the previous close of ₹1,803.80 on BSE. JP Morgan noted that revenue was 4% ahead of its estimates, while operating EBITDA stood at ₹30.8 billion, increasing 10.7% year-on-year but declining 13.2% quarter-on-quarter. The figure was 5.5% above the brokerage's estimates, with EBITDA margins remaining stable at 75.7% despite lower quarter-on-quarter revenues. However, lower other income dragged core adjusted profit after tax (APAT) to ₹25.6 billion, up 10.1% year-on-year and down 16.2% quarter-on-quarter, which was 3.5% above JPMorgan's estimates.
Jefferies has maintained its 'Buy' rating on NSE with a revised target price of ₹2,125, up from its earlier target of ₹2,085, indicating an upside potential of around 18% from current levels. Following NSE's Q2FY27 results, the global investment bank noted that "In-line Results; Valuations Do Not Reflect NSE's Moats." The report emphasizes that while results met expectations, the share price does not yet reflect the exchange's strong business advantages. Jefferies expects operating revenue to grow at a compound annual growth rate (CAGR) of 15.6% between FY27-29, with growth potential coming from cash market turnover, equity options and technology infrastructure services. The brokerage has assigned NSE a 15% premium over BSE, citing better diversification, margins and dividend yield as key differentiators. JP Morgan maintained its overweight rating with a target price of ₹2,130, highlighting strong expense control and stable EBITDA margins despite lower quarter-on-quarter revenue, noting that NSE trades at a FY28E price-to-earnings multiple of 36.8 times.
Tech spending grew 23% year-on-year in Q2FY27, with the exchange expecting technology costs to grow in the mid-teens going forward. According to Jefferies, NSE is adding new growth levers, which could add 15% to revenue/PAT by FY30e. The brokerage has kept its FY27-29E EPS estimates largely unchanged, as higher equity options ADTO in Q3FY27 will be offset by lower other income. Equity futures remained weak in NSE, with Futures ADTO declining 7.7% year-on-year, partly due to the Securities Transaction Tax (STT) increase implemented earlier in the year. However, commodity options premium ADTO rose 116% quarter-on-quarter, led by crude oil options, offering another source of activity. Cash market activity has remained relatively strong, with average daily traded turnover (ADTO) in cash equities increasing 24% YoY, supporting a 30% rise in cash transaction revenue.
Macquarie maintained its outperform rating with a target price of ₹1,975, describing the quarter as in line with estimates with equity cash performance ahead and options below expectations. According to The Hindu BusinessLine, the impact of Closing Auction Session (CAS) rules led to a quarter-on-quarter decline in average daily traded turnover (ADTO) across equity cash, futures, options notional and options premium segments. NSE's market share declined 130 basis points quarter-on-quarter in equity cash ADTO and 50 basis points in options premium ADTO. However, Macquarie expects volume recovery from 3QFY27 onwards following SEBI's revision of the CAS framework last month. Kotak Institutional Equities maintained its buy recommendation with a target price of ₹2,200, noting that NSE's investment case is supported by market leadership across liquidity pools, revenue diversification and scalable in-house technology.
Emkay Global maintained its buy rating with a target price of ₹2,050, expecting CAS amendments effective December 2026 to boost cash market participation and trading volumes. According to The Hindu BusinessLine, B&K maintained its buy recommendation with a target price of ₹2,100, expecting upcoming CAS regulatory changes and recovering options volumes to support trading activity. Kotak Institutional Equities expects mid-teens earnings growth, improving EBITDA margins, low capital intensity and strong cash generation, with key risks including further derivatives regulation, trading volume sensitivity, market share loss and technology or cybersecurity failures. The brokerage estimates ~13.5% revenue CAGR over FY26–29E and values NSE at 35x FY29E P/E, arriving at the target price of ₹2,200. This new recommendation adds to the existing bullish consensus from major Wall Street firms, with Morgan Stanley's ₹2,315 target and Jefferies' ₹2,125 target both implying significant upside potential from current levels.
India's capital markets remain significantly underpenetrated, creating substantial long-term growth opportunities for NSE. According to Morgan Stanley, only 3.2% of India's working-age population trades on the NSE cash market, while just 0.7% participates in equity derivatives. India's equity options premium turnover is also only about 20% of that of the US. As per The Hindu BusinessLine, Jefferies highlighted potential securities lending and borrowing reforms and improving mutual fund order market share as growth opportunities, with higher technology spending and transaction tax pressures remaining concerns. Jefferies believes valuations understate NSE's competitive advantages, while JP Morgan noted that NSE trades at a FY28E price-to-earnings multiple of 36.8 times. Jefferies has assigned NSE a 15% premium over BSE, citing better diversification, margins and dividend yield as key differentiators. NSE's core advantage lies in its liquidity, which creates self-reinforcing network effects, with the exchange having sustained more than 90% market share in cash equities and nearly 100% in equity futures and stock options.
The bullish outlook comes with important caveats regarding regulatory challenges and market dynamics. Both Morgan Stanley and JPMorgan identify regulatory changes, weaker trading activity and market-share losses as key risks that could constrain NSE's returns. For NSE, stabilising its position in index options will be particularly important, given that the segment contributed 52.6% of FY26 operating revenue, according to JPMorgan. The exchange's premium market share in index options declined from around 90% in November 2024 to approximately 66% in September 2026, following BSE's entry and regulatory changes by SEBI. However, JPMorgan believes the current market share is likely to be sustained, with the two exchanges' notional market shares converging towards 50%. The timing and scale of revenue diversification opportunities remain difficult to predict, as noted by Morgan Stanley. Growth in derivatives will depend on product adoption, taxation and regulatory policy, with the brokerage noting that the pace of expansion will depend on these factors.
