NSE Rises After First Post-IPO Q2 Earnings; Jefferies Raises Target

NSE’s First Results Put Trading Mix and Cost Control in Focus

The exchange’s profit growth outpaced income in Q2, while Jefferies sees scope for stronger revenue and margins over the coming years.

Profit growth reflects both trading income and lower costs

NSE’s first quarterly results since its Dalal Street debut showed net profit rising to ₹2,578 crore from ₹2,098 crore in the year-earlier quarter. Total income increased 9% to ₹4,554 crore. The faster growth in profit than income points to the contribution of a sharp decline in expenses, alongside higher transaction revenue. The filing did not provide an expense figure in the information available here, so the scale of that cost reduction cannot be quantified.

Transaction charges, the largest revenue item disclosed, rose 9% to ₹3,035 crore. The increase was supported by higher volumes in the cash market and equity options. That mix matters: NSE’s earnings are linked not only to overall activity, but also to which market segments drive trading and the transaction revenue they generate.

Cash-market activity strengthened, but futures remained weak

Cash-market average daily traded volume reached ₹1,18,377 crore, up 24% year on year. Equity-options average daily traded volume, measured by premium value, rose 3% to ₹47,977 crore. These figures show different growth rates across key segments, making the composition of trading activity important to the revenue outlook.

Jefferies noted that equity futures remained a weaker area, with futures average daily traded turnover down 7.7% year on year. The brokerage partly attributed this to the securities transaction tax increase implemented earlier in the year. That weakness is a counterpoint to the growth in cash and options activity: if futures turnover stays subdued, strength elsewhere will need to carry more of the trading-revenue burden.

Jefferies sees operating leverage, with technology costs in view

Jefferies described the results as in line with expectations, kept its Buy rating and lifted its target price to ₹2,125 from ₹2,085. It said current valuations do not reflect NSE’s competitive advantages. The target is the brokerage’s assessment, not a guaranteed outcome, and its outlook depends on business performance and assumptions about future trading activity.

The brokerage expects revenue to compound at 15.6% over FY27-29 and forecasts a 200-basis-point expansion in EBITDA margin by FY29, citing operating leverage. Its estimates assume technology spending grows at a slower pace: tech costs rose 23% year on year in the quarter, while NSE expects them to increase in the mid-teens. If costs grow more slowly than revenue, margins could benefit; if investment needs remain elevated, that improvement may be harder to achieve.

Jefferies left its FY27-29 earnings-per-share estimates largely unchanged, saying higher equity-options activity in the December quarter would be offset by lower other income. It also cited new growth levers that could add 15% to revenue or profit after tax by FY30. The available information does not specify those initiatives, so their contribution remains a forecast rather than a demonstrated earnings driver.

Key Highlights

• Consolidated net profit rose 23% year on year to ₹2,578 crore.
• Total income increased 9% to ₹4,554 crore; transaction charges also grew 9%.
• Cash-market average daily traded volume advanced 24%, while equity-options premium turnover rose 3%.
• Equity-futures turnover fell 7.7% year on year, which Jefferies partly linked to the STT increase.
• Technology costs grew 23% in the quarter; NSE expects mid-teens growth.
• Jefferies raised its target price to ₹2,125 and kept its Buy rating.

Investor Note: NSE’s results show healthy profit growth, but investors may want to assess whether trading activity across segments can sustain revenue expansion and whether technology spending moderates as expected. Jefferies’ target and forecasts are analyst views, not assured returns; the results and future execution remain central to the investment case.