Jefferies has begun coverage of NSE with a buy rating and Rs 2,085 target, forecasting 15% annual operating-revenue growth through FY29 as options recover and technology services expand.
Jefferies has started coverage of the National Stock Exchange of India with a “buy” recommendation and a target price of Rs 2,085, implying an upside of a little more than 17% from the level cited in its note. The brokerage said the exchange is entering a stronger phase after two years in which tighter regulation and higher taxes hurt its equity derivatives business.
According to Jefferies, NSE’s operating revenue could rise at a compound annual rate of 15% between FY27 and FY29, supported by a rebound in equity options, stronger cash-market volumes and further growth in technology-linked services. The brokerage expects operating revenue to climb from Rs 166,013 crore in FY26 to Rs 173,929 crore in FY27, Rs 198,442 crore in FY28 and Rs 230,294 crore in FY29, while earnings per share could increase from Rs 42.57 in FY26 to Rs 62.08 by FY29.
The report also argued that NSE’s dependence on weekly index options is less severe than many investors assume. Jefferies said such products account for about 40% of operating revenue, and it expects the share of equity options in transaction revenue to fall from 60% now to 50% over the next five years as the exchange broadens its business mix. New areas such as commodity derivatives, electronic gold receipts and a mutual fund order platform could together add about 15% to revenue and profit after tax by FY30, although those estimates are not part of the brokerage’s base case.
Jefferies also sees room for the exchange’s technology infrastructure business to expand as it adds more co-location racks, which allow trading firms to place servers close to NSE’s systems. It forecasts data and technology revenue to rise by 20% to 23% a year through FY29 and says 600 additional racks over two years could help drive that growth. The brokerage expects operating margins to widen by 200 basis points to 78% by FY29, but it flagged further regulatory tightening in equity options, cyberattacks and any disruption to market benchmarks as key risks. NDTV Profit reported that NSE shares rose more than 1% after the coverage launch, while other Indian financial outlets said Jefferies values the exchange at a premium to the Bombay Stock Exchange because of its broader growth prospects and stronger diversification.
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