A research read on the National Stock Exchange of India's Draft Red Herring Prospectus — strengths, weaknesses, the BSE threat, and the numbers nobody is putting in one place.
After roughly a decade of delays, National Stock Exchange of India Limited filed its Draft Red Herring Prospectus on June 17, 2026. It is India's most anticipated listing, but beneath the headline sits a more complicated story: a business whose growth engine slowed in the year before listing, a competitor that has overtaken it in a key market segment for the first time, and a regulatory scandal whose financial impact is still appearing in its accounts.
Much of the pre-IPO narrative was built on Fiscal 2025, when NSE reported revenue of ₹17,141 crore and profit of ₹12,188 crore, up 47% year-on-year. But the DRHP's latest reported year, Fiscal 2026, shows revenue declining to ₹16,601 crore and profit falling to ₹10,302 crore.
This IPO is a pure Offer for Sale of up to 148,905,525 equity shares, roughly 6% of NSE's equity. No proceeds go to the company.
Earlier market estimates suggested a ₹20,000–23,000 crore issue for around 4–4.5% of equity.
Selling shareholders include Life Insurance Corporation (10.72% pre-offer stake), State Bank of India, Temasek's Aranda Investments, Canada Pension Plan Investment Board, GIC, state-owned insurers, and several foreign private-equity investors. NSE has no promoter or promoter group, and no shareholder owns more than 11%.
The transaction exists primarily to provide liquidity to long-term investors. With ₹322 billion in cash and equivalents and no outstanding borrowings, NSE does not need fresh capital.
NSE remains India's largest stock exchange by cash-market and equity-derivatives turnover and has held that position since fiscal 2001.
According to the World Federation of Exchanges, more than half of all equity-derivatives contracts traded globally are executed on NSE. That places it ahead of CME Group, Intercontinental Exchange, and Deutsche Börse's Eurex in this category. NSE also ranked among the top three exchange groups globally by IPO count from FY23 through FY26 and among the top five by capital raised in FY26.
Its cost structure is equally impressive. NSE's non-volume-linked expenses, as a percentage of revenue, are lower than all but two of sixteen major global listed exchanges. On paper, it remains one of the strongest exchange businesses globally.
The business model is highly concentrated.
Nearly four out of every five rupees of revenue come from transaction charges, and options trading alone contributes roughly three out of every five rupees of total revenue.
The concentration extends beyond products. NSE states that its top ten trading members account for roughly 45–47% of total revenue from operations. That means the exchange depends not only on one dominant product category but also on a relatively small group of large brokers generating substantial trading volumes.
A shift in trading activity by even a handful of these participants could have a material impact on revenue.
The most important recent development is the shift in derivatives market share toward BSE.
In April 2026, BSE's share of India's futures-and-options turnover crossed 50% for the first time, reaching 55.4% versus NSE's 44.6%. BSE's average daily turnover rose 20% month-on-month to ₹269 lakh crore, while NSE's fell 26% to ₹216 lakh crore.
The reasons are largely economic. BSE charges effectively zero on futures contracts compared with NSE's 0.00183% and charges roughly one-seventh of NSE's options fee rate, 0.005% versus 0.0355%.
SEBI's rule limiting exchanges to one weekly index-options expiry also benefited BSE, giving Sensex contracts a dedicated Thursday expiry while NSE retained Tuesday for Nifty contracts.
The DRHP's FY26 data supports the same trend. BSE's share of the two exchanges' combined transaction-charge revenue increased from 5.5% to 22.5% in two fiscal years.
The pressure is visible beyond derivatives. In SME IPOs, NSE's EMERGE platform hosted 67.6% of issuances in FY25 compared with BSE's 32.4%. By FY26, the positions had reversed, with BSE hosting 56.8% of SME IPOs.
Whether BSE can sustain its pricing strategy remains uncertain. However, the competitive gains are currently occurring in the very product category responsible for around 60% of NSE's revenue.
The DRHP includes a Redseer comparison against sixteen listed global exchanges.
NSE's adjusted operating EBITDA margin of 75.5% is the highest in the group, ahead of HKEX, B3, CME Group, and other major peers.
However, NSE is not the leader on every metric.
It ranks third in Profit After Tax margin behind CME Group and Hong Kong Exchanges. It also ranks third in Return on Average Equity, trailing both BSE and MCX despite its much larger scale.
NSE's claim that it outperforms Nasdaq, LSEG, and Euronext is accurate, but it omits peers that score higher on certain profitability measures.
A central tension runs through the investment case.
NSE's global leadership is built largely on options-trading volumes. Yet regulators have increasingly acted to slow speculative activity in precisely that segment.
The FY27 Union Budget increased Securities Transaction Tax on futures, options selling, and options exercise. SEBI's October 2024 and May 2025 measures introduced larger lot sizes, upfront premium collection, and a one-weekly-expiry-per-exchange framework.
As a result, investors are being asked to buy into a business whose primary growth engine is also the area regulators are attempting to moderate.
Both statements can be true simultaneously: NSE is the world's largest options market, and regulators are actively discouraging some of the activity that supports that position.
NSE cannot list on itself, so the company will list on BSE—the same rival that recently surpassed it in F&O turnover.
Despite extensive comparisons with Nasdaq, ICE, and Deutsche Börse, there is no ADR structure or U.S. listing plan. This is a fully domestic, rupee-denominated Offer for Sale aimed at institutional investors.
The colocation and dark-fibre controversy remains the defining governance issue in NSE's history.
The matter began in 2015 when allegations emerged that certain brokers received preferential access to NSE's tick-by-tick data feed through the exchange's colocation facility. A related dark-fibre issue involved brokers including Way2Wealth and GKN Securities allegedly using unauthorized optical-fibre connections.
SEBI ultimately found NSE and 17 other entities, including former CEOs Chitra Ramakrishna and Ravi Narain, guilty of collusion and unfair trade practices. The matter resulted in penalties, investigations, arrests, and years of litigation that effectively delayed any realistic IPO process.
The DRHP reflects the financial cost. NSE recorded a fresh ₹1,391 crore provision in FY26, in addition to ₹100 crore adjusted in FY23, bringing cumulative settlement exposure to roughly ₹1,491 crore. This broadly aligns with reported settlement discussions of ₹1,300–1,491 crore with SEBI.
As of the June 17, 2026 filing date, settlement applications remained pending final disposal and Supreme Court appeals were still open. The auditors specifically highlighted the matter as an emphasis-of-matter item.
This is, quite literally, the IPO that the colocation scandal delayed for nearly a decade.
The second major concern is financial performance.
Revenue declined from ₹17,141 crore in FY25 to ₹16,601 crore in FY26. Net profit fell from ₹12,188 crore to ₹10,302 crore, a year-on-year decline of 15.5%.
Whether management chose to absorb settlement costs before listing or simply faced unfortunate timing is open to interpretation. What is clear is that both revenue and profit moved lower in the year preceding the IPO.
Additional concerns disclosed in the filing include recurring SEBI notices and settlements, governance-compliance lapses involving board and committee composition, a Chairperson vacancy lasting 651 days, losses at several subsidiaries, ₹26 billion of litigation exposure, and elevated senior-management attrition in FY24 and FY25.
None are individually catastrophic, but collectively they represent a governance overhang.
Several interesting observations emerge only when different sections of the DRHP are viewed together.
First, NSE's status as the world's largest derivatives exchange by contract count may become less meaningful over time. Index-options contract volumes declined at a 39.14% compound annual rate between FY24 and FY26 following SEBI's larger lot-size requirements, yet transaction revenue from the segment remained relatively stable.
The explanation is straightforward: fewer contracts are being traded, but each contract is larger. Revenue therefore held up even as contract counts dropped by more than 60%.
Second, CEO remuneration increased every year despite the FY26 profit decline.
Managing Director and CEO Ashishkumar Chauhan's remuneration rose from ₹11.27 crore in FY24 to ₹13.99 crore in FY25 and ₹15.89 crore in FY26, an increase of 41% over two years. Profit rose sharply in FY25 but declined in FY26 while compensation continued climbing.
Other notable disclosures include the loss of EU clearing-member recognition in April 2023 after ESMA revoked third-country CCP status for NCL and NSEICC, ongoing governance litigation involving associate company MSIL, and the fact that roughly half of options premium turnover comes from proprietary and algorithmic traders rather than retail participants.
Unlisted secondary-market transactions between January and May 2026 occurred around ₹1,950–2,015 per share, implying a market capitalization exceeding ₹4.9–5.0 trillion before the IPO price band is announced.
NSE remains one of the strongest exchange businesses globally. It dominates Indian cash equities and derivatives, operates with industry-leading margins, and maintains extraordinary scale.
But the company coming to market in 2026 differs from the version investors celebrated in FY25. Its core derivatives franchise has lost majority market share to a domestic competitor, revenue and profit declined in the most recent year, its largest regulatory dispute is being resolved through a financial settlement, and its growth narrative depends heavily on activity regulators are attempting to restrain.
The IPO itself provides no capital to the business. It is primarily a liquidity event for long-standing shareholders who waited years for the colocation issue to move toward resolution.
Strong business. Weaker recent trajectory. Significant regulatory scar tissue. Those are the realities investors must weigh when evaluating the offering.
Disclaimer: This AI-generated analysis, based on RHP/DRHP information, is for informational purposes only. Investors should conduct due diligence and consult financial advisors before making investment decisions. Past performance does not guarantee future results, and all investments carry inherent risks including potential loss of principal.
