Jefferies Starts NSE at Buy With Rs 2,085 Target as the Stock Hovers Near Its IPO Price

A little over a month after one of the largest listings in Indian market history, shares of the National Stock Exchange of India are trading almost exactly where they were sold. On Thursday, Jefferies initiated coverage on the exchange operator with a Buy rating and a target price of Rs 2,085, roughly 17% above the previous close of around Rs 1,777, arguing that the market is underpricing both NSE's resilience and its new businesses.

The timing matters. NSE's IPO was priced at Rs 1,785 per share, so investors who bought in the offer are broadly flat after the September debut. Thursday's note is effectively a bet that the post-listing lull is a buying window rather than a verdict on the stock. Shares were trading near Rs 1,790 in early deals. (See our coverage of NSE's market debut.)

The valuation argument: why a premium to BSE

The most striking part of the note is how it handles the BSE comparison. NSE currently trades at about 34 times estimated FY28 earnings per share, which works out to an 18% discount to BSE. Jefferies thinks that gap points the wrong way.

Its Rs 2,085 target is built on 35 times December 2028 EPS, which the broker says is about a 15% premium to its own fair value for BSE. It gives four reasons: NSE is more diversified, has more optional growth businesses, pays a higher dividend yield and runs structurally higher margins.

Jefferies is not the most bullish house on the street. Asian Markets Securities has the highest target at Rs 2,170. Emkay Global rates the stock a Buy with a Rs 2,050 target, Macquarie has an Outperform at Rs 1,965, and PL Capital sits at Accumulate with Rs 1,950. The new note narrows the range at the upper end rather than stretching it.

Taking on the options worry

The main bear case on Indian exchanges has been their reliance on equity derivatives, especially weekly index options, which Sebi has repeatedly tightened. Jefferies says this dependence is overstated for NSE.

About 60% of NSE's operating revenue comes from equity options. But weekly index options, the slice that has drawn regulatory action, make up about 40% of operating revenue at NSE, against roughly 65% at BSE. The broker also notes that low-turnover clients, the small traders Sebi is most keen to protect, account for only 2-3% of the business. It expects equity options' share of transaction revenue to drift down from 60% to about 50% over five years as other lines grow.

There is also a hedging point. Because options fees are tied to premiums, Indian exchange revenue tends to rise with the India VIX volatility gauge. In a month when crude has held above $110 and foreign investors have sold heavily, that feature is a practical advantage, not just a talking point.

Where the upside could come from

Jefferies expects EBITDA margin to widen by about 200 basis points to 78% by FY29, helped by three years of spending on staff and technology that should now pay off, faster revenue growth over FY27-29 and the scaling of new businesses.

Technology infrastructure, mostly colocation racks, made up 8% of FY26 revenue and could reach 11% by FY29, a line the broker sees as relatively shielded from AI disruption. Commodity derivatives, a new mutual fund ordering platform and electronic gold receipts could add another 15% to revenue and profit by FY30, though Jefferies has left these out of its base case. Corporate bond futures, GIFT City and Market Lens are further options.

The long-term case rests on participation. India's direct equity investor base has grown about fourfold since the pandemic, yet it still covers only around 3% of the population, compared with about 18% in China.

What to watch

For a stock trading near its offer price, the next trigger is likely to be NSE's first quarterly results as a listed company and any fresh Sebi move on derivatives. A target well above the current price helps sentiment, but the stock will still need earnings to close that gap.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.