NSE prepares for India's largest-ever IPO with plans to list in US and London markets

Global broker Jefferies predicts that the upcoming Initial Public Offering (IPO) of the National Stock Exchange of India (NSE) will be the final piece in India's exchange triad, as the country's largest exchange prepares for its long-awaited market debut.

Formation of the Exchange Triad

Following the NSE listing, it will join the Bombay Stock Exchange (BSE) and the Multi Commodity Exchange of India (MCX), which are already publicly traded. Thus, all three major exchange operators will be on Dalal Street. NSE plans to conduct an IPO valued at approximately 30,000 crore rupees in September. If successful, this offering will value the country's largest stock exchange at over 5 trillion rupees, allowing it to surpass the Hyundai Motor India IPO launched in October 2024, becoming the largest public offering in the country's history.

Growth of the Options Market in India

According to Jefferies, the Indian equity options market shows impressive growth with a Compound Annual Growth Rate (CAGR) of 56 percent for the financial years 20-26, significantly higher than the 19 percent rate for the money market turnover. In FY26, the average daily premium turnover for options accounted for about 70 percent of the daily money market turnover. Consequently, derivatives instruments provided around 70 percent of the operating income for Indian exchanges.

In the opinion of Supratim Datta, Prahar Sharma, and Satvik Kanabar from Jefferies, this has led to a decoupling between exchange revenues and market activity cycles, as options trading is closely linked to volatility rather than price movement. Jefferies also noted that although India trades more options contracts compared to the US market, premium rates for options in India are only one-fifth of those in America.

NSE's Dominance in the Market

NSE, established in 1993, generates about 70 percent of the revenue for Indian exchanges, according to Jefferies. Furthermore, the exchange appears to be the most diversified among its competitors, offering services in cash equities, index options, individual stock options, stock futures, commodity futures and options, bonds, and currency derivatives. In most categories, except for index options and Futures & Options (F&O), NSE holds over a 90 percent market share.

The NSE clearing corporation, NSE Clearing Ltd (NCL), controls an 88 percent market share in the cash segment and 91 percent in the F&O segment. The exchange also provides a range of technology and information services that brought in 13 percent of revenue in FY26, and it is expanding its presence in commodity F&O.

Impact of Regulatory Expenses on Profitability

Jefferies asserts that NSE remains more profitable than BSE due to its stronger equity options business. Excluding one-time settlement costs from the Securities and Exchange Board of India (Sebi), NSE's normalized EBITDA margin remained stable at 76-77 percent during the FY24-26 period. The Jefferies report stated: 'NSE's higher clearing market share and the premium to nominal turnover in equity options have led to higher profitability compared to BSE. However, provisions related to the colocation and dark fiber case (INR 1390 crore in FY26) and the payment of INR 670 crore regarding the TAP issue in FY25 affected NSE's operating EBITDA in FY25 and FY26. Considering the one-time nature of Sebi charges, if excluded, NSE's normalized operating EBITDA margin (76-77 percent) was largely stable from FY24 to FY26.'

Strong Balance Sheet and High Dividends

According to the broker, in FY26, NSE's assets amounted to 28,800 crore rupees, including government securities and mutual funds. NSE set aside funds for potential Sebi actions, while contingent liabilities (INR 1,050 crore in FY26) are mainly related to income and service tax disputes. Jefferies added: 'The combination of strong operating cash flows with limited capital expenditure (3-3.5 percent of revenue) allowed NSE to distribute 74 percent and 85 percent of profits as dividends in FY25 and FY26, respectively.'

Risks and Litigation

Jefferies warned investors about the regulatory issues and legal battles facing the country's largest exchange. The broker reported that NSE has faced regulatory measures concerning access to its colocation facilities and servers, and the company is in the process of resolving these matters with Sebi. Additionally, 20 civil and nine criminal cases have been filed against NSE. Jefferies also noted that restrictions on weekly index options and the increase in minimum contributions to the Securities Portfolio Guarantee Fund (SGF) negatively impacted NSE during FY25-FY26.

Potential Improvement in Insurers' Solvency

The NSE Offer for Sale (OFS) document indicated that state general insurers intend to sell 1.1 percent of their stake. The broker expects this OFS to improve the solvency of state general insurers. Jefferies commented: 'We note that three out of four multi-line general insurers (Oriental, National, and United) have solvency below the regulatory threshold by 1.5 times. The OFS may increase the available solvency capital for these insurers.'

Investors are closely watching when a new opportunity for profit will appear in the stock market. Although the pace of the IPO market has slowed in recent months, the situation is changing with the arrival of July. Many large corporations have completed preparations for their IPO, which has reactivated the primary market.

Reasons for the Expected IPO Boom

According to the regulator SEBI and the Anand Rathi Research report, July promises to be a period of significant opportunities for investors. Market experts believe that the growth in domestic market stability and the strengthening of retail investor confidence have stimulated company enthusiasm, prompting major corporations to prepare for listing.

Key Players in the Market

Among the most notable participants on this list are three companies. SBI Funds Management is preparing to launch a mega-IPO aimed at raising about 12–13 thousand crore rupees. In the healthcare sector, the major player Manipal Health Enterprises plans to raise around 11 thousand crore rupees. Additionally, the quick commerce giant Zepto is projected to have an IPO valued at approximately 8 thousand crore rupees. These three companies together intend to raise a substantial amount of about 32 thousand crore rupees, and more than a dozen other companies in the queue increase the total target to over 45 thousand crore rupees.

Strong SEBI Pipeline

The prospects for the primary market remain very strong. Companies are actively competing to attract capital, and the regulator supports this process. According to official data as of June 19, 173 companies have received SEBI approval to conduct an IPO, and they potentially can raise about 2.7 lakh crore rupees. In addition to these, another 64 companies are awaiting their turn, indicating that this wave will not weaken anytime soon.

Return of Activity After Downturn

The beginning of 2026 was not very optimistic for the IPO market. Global tensions, the Iran War crisis, and the caution of foreign portfolio investors (FPIs) led to the suspension of new listings. Only 18 IPOs appeared in the country before April, and May was completely without market debuts. However, it was retail investors who contributed to changing this situation, steering the market in a new direction.

Strengthening Investor Confidence

According to analysts, amid these changes, investors prefer to choose companies with a solid foundation rather than weak enterprises. Liquidity is growing in companies that demonstrate potential for future growth. Despite the stagnation in foreign fund activity, confidence in the Indian market is recovering thanks to the capital of domestic investors.

Continuation of IPO Market Growth

Experts associated with the investment banking sector note that this listing process will accelerate in the coming weeks due to reduced global uncertainty and the strong foundation of the Indian economy. This new wave in July is a clear sign that the primary market has returned to its previous pace. Large placements and growing investor interest will play a decisive role in determining the direction of the entire stock market in the coming months.