NSE Trades at a Discount to BSE, Highlighting Growth Potential Over Scale.

The upcoming initial public offering (IPO) of the National Stock Exchange (NSE) is noteworthy, given its extensive operational scale and prominent market position. However, the IPO is reportedly priced at a discount compared to its rival, the Bombay Stock Exchange (BSE). With an anticipated market capitalization of around ₹5 lakh crore, the calculated price-to-earnings (P/E) ratio for NSE stands at approximately 49, contrasting sharply with BSE’s P/E ratio of nearly 67. This discrepancy primarily highlights NSE’s muted growth in its core operations as compared to BSE, which is experiencing robust revenue growth, particularly in its derivatives segment.

While BSE has successfully revitalized its derivatives segment, resulting in more than doubling its revenue to ₹1,127.9 crore, NSE has seen a decline in its derivative revenues and overall operating revenue. For FY26, NSE’s operating revenue dropped by 3.1% to ₹16,601.3 crore, markedly different from BSE’s impressive growth of 63.5%, reaching ₹4,834 crore. Despite a strong operational margin for NSE at 66.9%, BSE is narrowing the gap with its operating margin increasing to 64% from the previous year. The comparative figures suggest that while NSE holds the title for size, BSE is achieving quicker growth.

From an investor’s perspective, the pricing dynamics of this IPO present a unique consideration. The muted performance of NSE against its local peer raises questions about the future growth potential. Despite NSE’s lower P/E ratio compared to BSE, the fact that both exchanges have higher P/Es than global peers could indicate an overvaluation scenario. Thus, Indian investors would need to weigh the inherent risks against the prospects of growth and performance as the IPO approaches, particularly given BSE’s current upward trajectory in revenue and profitability.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova IPO team.)