Buy National Stock Exchange; target of Rs 2050: Emkay Global Financial

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Regulatory reforms, such as amendments to the Capital Allocation and Supplement (CAS) and easing of EPI margins, are expected to improve cash market volumes.
  • Strong growth in Listing Services revenue, up ~92% qoq, partially offset the decline in transaction charges due to CAS implementation.
  • NSE plans to launch corporate bond index futures, awaiting RBI approval, which could further drive growth.
  • Management expects no change to the expiry frequency for equity derivatives, supporting stability in the business.

Thesis Validation Checklist

  • Investors should watch for improvements in cash market volumes and growth in Listing Services revenue over the next ~12 months.
  • The success of the corporate bond index futures launch and the impact of regulatory reforms on NSE's business will be key signals to validate the investment thesis.
  • Monitoring the company's ability to maintain its market share in Equity Options and its progress in expanding its product offerings will also be important.
  • Additionally, tracking the management's ability to control costs and improve operating efficiency will be crucial in assessing the sustainability of the business model.