Pricey affair! Is NSE's valuation premium to global peers justified?

Analysts said that NSE's rich valuation is justified by its strong leadership position, supported by aliquid marketplace & powerful network effects arising from the country's structural market growth.

NSE IPO valuation: The National Stock Exchange (NSE) has lowered the valuation by around 15 per cent from what it was seeking, though it remains the most richly valued exchange franchise globally. At the upper end of the IPO price band, ₹1,785, NSE is valued at around 42.9x FY26 earnings, placing it among the most richly valued exchange franchises globally.

 

Analysts said that NSE's rich valuation is justified as it enjoys a strong leadership position, supported by its liquid marketplace and powerful network effects arising from the country’s structural market growth.

 

“NSE’s IPO is priced at a premium, but its dominant market position, structural growth opportunities, and operational strength make the valuation defensible," Rajesh Agarwal, head of research at AUM Capital Market, said. NSE vs global peers 

 

 

According to Bloomberg data, Coinbase Global trades at a P/E multiple of 40.35x, while Singapore Exchange commands a multiple of 34.56x. Similarly, London Stock Exchange Group and Nasdaq trade at P/E multiples of 29.35x and 25.95x, respectively.

 

CME Group, Intercontinental Exchange, HKEX, Deutsche Börse, Cboe Global Markets, and Japan Exchange Group trade broadly in the 23–25x P/E range. 

 

 "India’s capital markets are structurally growing faster than mature markets (Nasdaq, LSE, Deutsche Boerse), warranting a growth premium. India’s household financialisation and low capital-market penetration provide a long structural growth runway," Rajesh added. 

READ MORE: NSE IPO draws 'unexpectedly large' demand, anchor book tops ₹6,000 cr: CEO

 NSE vs BSE valuation 

Interestingly, domestic peers BSE Ltd and MCX trade at significantly higher valuations, with P/E multiples of 54.33x and 60.77x, respectively, making them more expensive than NSE. Rajesh said that BSE's higher multiple is partly justified by its faster current growth off a smaller base. READ MORE

 NSE most profitable global exchange 

According to Ventura, NSE's premium is supported by its scale and operating leadership. NSE has been India’s largest exchange by total turnover in cash equities and equity derivatives from FY01 through FY26 and was also the world’s largest multi-asset exchange by number of cash-equity trades and equity-derivative contracts in FY26, with global shares of 11.38 per cent and 51.18 per cent, respectively. Profitability is equally strong, with a 62.1 per cent Profit margin and 32.1 per cent RoE in FY26, placing NSE among the most profitable global exchange operators. READ MORE: NSE IPO review: Is India's top exchange a must have in portfolio?

 

"NSE deserves a premium valuation to global peers given in FY26, NSE held 92.99 per cent share in cash-market turnover, 99.79 per cent in equity-futures turnover and 74.71 per cent in equity-options premium turnover. This underscores the depth of its liquidity franchise. Its operating economics are also exceptional as it has the highest adjusted operating Ebitda margin among leading listed global exchange groups," Vinit Bolinjkar, head of research, Ventura, said. 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.