New Delhi [India], June 20 : The National Stock Exchange's proposed initial public offering (IPO), expected to raise nearly Rs 30,000 crore through an offer-for-sale, could become India's largest-ever public issue, while also highlighting the exchange's dominant position in the country's capital markets and its heavy reliance on derivatives trading revenues, according to an analysis by Zerodha's Daily Brief.
Calling the NSE "the beating heart" of India's financial market infrastructure, the analysis noted that the exchange sits at the centre of a rapidly expanding investor ecosystem, with nearly 13 crore registered investors as of March 2026, up from just over 9 crore two years ago.
"India is now the fourth-largest equity market in the world by market capitalisation," the report said, adding that "India added about 4 crore new investors in just two years."
The analysis highlighted that NSE generated about Rs 16,600 crore in operating revenue during FY26, with nearly 79 per cent coming from transaction charges collected on trades executed on its platform. Equity options alone contributed around Rs 10,000 crore, accounting for roughly 60 per cent of total revenue.
"The mega-earner, however, were equity options, which singularly generated Rs 10,000 crore - or 60 per cent of NSE's total revenue," the report said. "Much of that was the result of a single instrument: the Nifty 50 weekly options contract."
However, the report noted that such dependence makes NSE highly sensitive to regulatory changes. It pointed to the Securities and Exchange Board of India's (SEBI) derivatives market reforms in October 2024, which reduced weekly expiries and increased lot sizes, leading to a decline in trading volumes.
"These measures reduced retail speculation, as intended. Derivatives volumes fell sharply, and NSE's revenue fell with them," the analysis said. Revenue from operations declined from about Rs 17,100 crore in FY25 to Rs 16,600 crore in FY26, while profit fell from approximately Rs 12,200 crore to Rs 10,000 crore.
The report also underscored NSE's strong profitability. Despite spending around Rs 6,000 crore during FY26, the exchange reported a profit of nearly Rs 10,000 crore, translating into a margin of about 51 per cent.
"For a company with Rs 16,600 crore in revenue, that is exceptionally lean," the report said while discussing employee expenses, which stood at Rs 790 crore. "This just isn't a people business. NSE's product is a matching engine: software that processes millions of orders per second."
Another key takeaway from the analysis was the role of NSE Clearing Ltd (NCL), the exchange's subsidiary that guarantees settlement of trades. The report said NCL clears about 88 per cent of all cash market trades and 91 per cent of equity derivatives in India.
"It is the silent guardian ensuring the sanctity of every trade on the NSE," the report said.
According to the analysis, NSE distributed Rs 8,660 crore as dividends in FY26, representing a payout ratio of 84 per cent, while continuing to hold investments worth Rs 64,771 crore on its balance sheet.
Summing up the exchange's business model, the report said, "NSE has as privileged a place as the financial markets can offer. It earns whether markets go up or down, and whether individual trades are profitable or not." It added that unless there is a major collapse in India's financial markets, "few things can touch this giant".