Accumulate National Stock Exchange of India; target of Rs 1950: Prabhudas Lilladher

Key Investment Pillars

• NSE's operating revenue is expected to grow 7% in FY27E, driven by new product segments such as commodities and mutual funds, which are seeing strong traction.
• The company is diversifying its revenue streams beyond traditional trading activities, with a focus on new products and platforms, including commodity derivatives and electronic gold receipts.
• Operating expenses are expected to remain controlled, with a focus on improving operating leverage through better cost management, including employee and technology costs.
• The analyst expects EBITDA margin expansion of 48bps in FY27E, driven by improved operating leverage.

Thesis Validation Checklist

• Investors should watch for signs of volume recovery, particularly in the cash and options segments, as well as growth in new product segments such as commodities and mutual funds.
• The company's ability to maintain its market share in the options segment, particularly in the face of regulatory changes, will be an important indicator of its competitive position.
• The analyst expects the company's focus on Electronic Gold Receipts (EGRs) to encourage a shift from physical gold to dematerialized assets, which could drive growth in the company's revenue.
• Geopolitical volatility remains a key near-term risk to activity, and investors should monitor the company's ability to navigate these risks and maintain its growth momentum.