NSE IPO:Whenever you buy or sell a share in the stock market, your entire focus is on the profits, margins and management of that company. But have you ever thought about the platform through which this entire business of the country is done? India’s largest stock exchange, National Stock Exchange (NSE) is now making full preparations to launch its IPO. NSE, which conducts trading across the country, is now itself going to be listed in the stock market, about which there is huge enthusiasm among investors. But before investing money in this mega IPO, it is very important to understand how NSE earns money, where is the huge profit in its business model and where is the big risk hidden.
How does NSE print notes?
The business model of NSE is completely different from that of any bank, manufacturing or technology company. It neither gives loan to anyone nor makes any goods. It is purely a platform business, which works to connect buyers and sellers at one place. It charges transaction charges on the execution of every trade in the market. In India, as people are leaving physical assets like gold and land and moving towards the stock market, there is a huge increase in the earnings of the exchange. Currently, only 13.5% of India’s adult population participates in the equity market, which directly means that there is immense potential for further growth for this business.
F&O dominates total revenue
According to the financial data for the financial year 2025-26, the largest part of the total operating revenue of NSE i.e. about 79% comes from transaction charges.
- Monopoly of derivatives: The biggest contributor to this transaction charge is the derivatives (F&O) market, where 76.6% is earned from options alone and 11.3% from futures. The share of common cash equity (buying and selling of shares) is only 11.9%.
- Data and Connectivity Fees: In exchange for providing market data feed and trading infrastructure to brokers and financial institutions, NSE gets 10% of the revenue, which is a fixed and secure income.
- Treasury Income: NSE also invests its own deposits, which constitute 15% of its total income. This provides stability to the company’s profits during times of market downturn.
- Other means: Companies get 2% listing fee for listing and 1% index licensing fee from mutual fund houses in exchange for the use of indices like Nifty. Apart from this, Trade Settlement and Clearing Corporation earns 1.5%.
Biggest expenditure on technology
The biggest expenditure of NSE is on maintaining its technology, data center and network system. The good thing is that this is a fixed cost, which means that no matter how much the trading volume increases, this cost does not increase suddenly. Due to this, the profit margin of the company remains very excellent. However, there are some big headwinds (challenges) associated with this business. The biggest risk is its excessive dependence on Futures and Options (F&O). The strictness being done by SEBI in the rules of F&O market can directly affect the transaction revenue of NSE. Apart from this, any technical outage or cyber attack can hurt not only its earnings but also the market confidence. Also, the tough competition from the domestic market listed rival BSE cannot be ignored.
Better option for long term
Market analysts believe that NSE’s IPO will attract a lot of investors due to its strong market share and excellent profits. According to Shweta Padhi, Lead Research Analyst, IDBI Capital, NSE will directly benefit from the financialisation of savings in India, hence it is an excellent and high-quality business for investors’ portfolios. At the same time, Senior Research Analyst of Geojit Investments Vincent K.A. It says that this IPO is most suitable for those investors who want to invest for the long term in the growth of India’s financial sector rather than listing gains or short-term trading. According to domestic brokerage firms, if the valuation of this IPO remains within the right range, then it can prove to be an excellent wealth creating stock in the long term.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
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