The National Stock Exchange (NSE) is targeting a September 2026 launch for its ~₹30,000 crore IPO — set to be India's largest-ever — at an expected valuation of over ₹5 lakh crore (≈$60 billion). But NSE's FY26 profit after tax fell 15% to ₹10,302 crore, raising a sharp question: what multiple should a near-monopoly exchange command when its earnings are going the wrong way?
NSE is the exchange on which almost every Indian stock you own is traded. It holds 93% of India's cash-equity market and 99.8% of equity futures. That is not a business — it is infrastructure.
So when its IPO lands, the first thing a CFO asks is not 'should I subscribe?' It's: 'what story does the valuation tell?'
Here is the maths. FY26 PAT: ₹10,302 crore. Expected market cap: ₹5 lakh crore+. Implied P/E: roughly 48x. That is not cheap — but for a near-monopoly with 55% net margins and 32% ROE, a premium is defensible.
The wrinkle: earnings fell 15% year-on-year. Why? SEBI tightened F&O (futures and options — derivative contracts on stocks) rules in FY26 to curb retail speculation. Since transaction charges from derivatives alone drive ~70% of NSE's revenue, even a monopoly is not immune to its own regulator.
This is the core valuation lesson. P/E (price-to-earnings ratio: market cap ÷ annual profit) is just the headline. A CFO digs one layer deeper — is the 'E' in that P/E stable, growing, or structurally at risk? When a single regulatory decision can swing 15% of your profit, the multiple you pay for 'certainty' deserves a serious haircut.
Before you read any IPO prospectus, ask: what is the earnings quality, and who controls the earnings lever?
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