NSE has been one of the most talked-about IPOs in the financial year. The company is going to open for bidding on 17th September, and the shares are scheduled to be listed on 24th September. Ahead of the IPO opening, the grey market premium was reported at around 8%–9% above the upper end of the issue price as of 16th September, although GMP is an unofficial indicator and can change before listing.
This makes it important to analyse the company and understand how it could perform. If we look at the growth rate over the previous couple of years, the company grew by around 16% in FY25, while revenue declined by approximately 3% in FY26.
If we assume a 20% growth rate along with other key assumptions, we arrive at an estimated value of ₹1,232 per share, which is approximately 31% below the upper-band price.
| Enterprise Value | 257969.39 |
| Less: Net Debt | 412.39 |
| Add: Cash & Investments | 47244.86 |
| Equity Value | 304801.86 |
| Shares Outstanding | 247.5 |
| Fair Value per Share | 1231.52 |
| Upper Price Band (Issue Price) | 1785 |
| Upside/Downside | -31.01% |
NSE Business Model and Revenue Forecast
One of the key aspects of the NSE valuation analysis is understanding what the company’s potential growth rate could be. Management has not provided a specific revenue growth forecast for the upcoming years. However, if we look at the growth rate over the previous years, we can see that the company’s growth is gradually maturing.
The company grew by nearly 16% in FY25, while it recorded a decline of around 3% in FY26. One of the key aspects of the company’s business model is that the majority of its revenue comes from transaction charges. Nearly 78% of the company’s revenue comes from transaction charges, while the remaining approximately 22% comes from non-transaction charges.
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This high dependence on transaction-related revenue means that NSE’s financial performance is closely linked to market activity and trading volumes. When market activity does not increase significantly, transaction-related revenue can also come under pressure. Since trading activity and volumes across key segments have not increased consistently, transaction-related revenue has also experienced periods of slower growth. This is one of the key reasons why the company has experienced the growth rate mentioned above.
| Key assumption | |
| Revenue Growth% | 20.00% |
| Annual Growth Tapering | 2.00% |
| Terminal Growth Rate | 5.00% |
| WACC | 8.00% |
| Financial Performance (₹ Crores) |
| INCOME STATEMENT |
| Particulars | 2022 | 2023 | 2024 | 2025 | 2026 |
| Sales | 8313.13 | 11856.23 | 14780.01 | 17140.68 | 16601.31 |
| % growth | 0% | 43% | 25% | 16% | -3% |
| Gross Profit | 8090.02 | 11514.96 | 14327.26 | 16813.75 | 16157.25 |
| % margin | 97% | 97% | 97% | 98% | 97% |
| Operating Expenses | 1484.75 | 2086.34 | 4453.85 | 4142.67 | 4892.6 |
| % of revenue | 18% | 18% | 30% | 24% | 29% |
| EBITDA | 6605.27 | 9428.62 | 9873.41 | 12671.08 | 11264.65 |
| % margin | 79% | 80% | 67% | 74% | 68% |
| Depreciation | 310.45 | 384.06 | 439.55 | 546.59 | 623.51 |
| % of sales | 4% | 3% | 3% | 3% | 4% |
| EBIT | 6294.82 | 9044.56 | 9433.86 | 12124.49 | 10641.14 |
| % margin | 76% | 76% | 64% | 71% | 64% |
| Other Income | 601.81 | 851.13 | 1649.68 | 3956.42 | 3417.28 |
| Interest | 0 | 0 | 0 | 24.19 | 40.3 |
| % of debt | 0% | 0% | 0% | 5% | 10% |
| Profit before tax | 6896.63 | 9895.69 | 11083.54 | 16056.72 | 14018.12 |
| % of revenue | 83% | 83% | 75% | 94% | 84% |
| Tax | 1698.34 | 2539.7 | 2777.8 | 3869.03 | 3716.05 |
| % of PBT | 25% | 26% | 25% | 24% | 27% |
| Net profit | 5198.29 | 7355.99 | 8305.74 | 12187.69 | 10302.07 |
| % of revenue | 63% | 62% | 56% | 71% | 62% |
| Revenue Projections & Growth Assumptions | |||||
| Year | FY27E | FY28E | FY29E | FY30E | FY31E |
| Revenue Growth % | 20% | 18% | 16% | 14% | 12% |
| Revenue (in Crs.) | 19921.57 | 23507.45 | 27268.65 | 31086.26 | 34816.61 |
| Free Cash Flow Projections (₹ Crores) | |||||
| Revenue | 19921.57 | 23507.45 | 27268.65 | 31086.26 | 34816.61 |
| EBITDA Margin % | 68% | 68% | 68% | 68% | 68% |
| EBITDA | 13517.58 | 15950.74 | 18502.86 | 21093.26 | 23624.46 |
| Less: Depreciation | 673.04 | 794.19 | 921.26 | 1050.24 | 1176.27 |
| EBIT | 12844.54 | 15156.55 | 17581.60 | 20043.02 | 22448.19 |
| Less: Tax | 3211.13 | 3789.14 | 4395.40 | 5010.76 | 5612.05 |
| NOPAT | 9633.40 | 11367.41 | 13186.20 | 15032.27 | 16836.14 |
| Add: Depreciation | 673.04 | 794.19 | 921.26 | 1050.24 | 1176.27 |
| Less: Reinvestment | -4816.70 | -5683.71 | -6593.10 | -7516.13 | -8418.07 |
| Free Cash Flow to Firm | 5489.75 | 6477.90 | 7514.36 | 8566.37 | 9594.34 |
How Our Model Could Fail
Our DCF model is based entirely on key assumptions, particularly how the company’s revenue and future growth could develop. Since management has not provided any specific growth forecast for the upcoming years, we have looked at the company’s growth over the previous couple of years. Based on this, we have taken a 20% growth rate assumption, and on the basis of this assumption, we are arriving at the valuation mentioned above.
There are several factors that could cause our model to change. As the market continues to grow, we could see more participants entering the market. This could potentially result in stronger performance for the company, as more participants and higher market activity could lead to increased transaction volumes.
Additionally, if the NSE creates more avenues and opportunities for market participants, including NRIs, and this results in higher transaction volumes, there could be another possibility that the company’s revenue growth could be different from our current assumption. Accordingly, the future cash flows would also change, which would ultimately affect the overall valuation model.
Therefore, these factors could be potential reasons why our model may change over time. We have also assumed a 5% terminal growth rate, which is another important assumption in our DCF model. We are expecting that, over the long term, the company could maintain at least a 5% growth rate in the upcoming years. This is the terminal growth assumption we have taken in our model.
FAQ
1. What is the estimated fair value of NSE shares based on this DCF analysis?
Based on a 20% revenue growth assumption and other key inputs (8% WACC, 5% terminal growth), the DCF model estimates a fair value of approximately ₹1,232 per share — about 31% below the upper end of the issue price band (₹1,785).
2. When does the NSE IPO open and when will it list?
The IPO opens for bidding on 17th September, with listing scheduled for 24th September.
3. Why is NSE’s revenue growth expected to slow down?
Nearly 78% of NSE’s revenue comes from transaction charges, making it highly dependent on market trading volumes. Since trading activity hasn’t grown consistently across key segments, transaction-related revenue has faced periods of slower growth — the company grew ~16% in FY25 but declined ~3% in FY26.
4. What key assumptions drive this DCF valuation?
The model uses a 20% revenue growth rate (tapering 2% annually), a 5% terminal growth rate, and an 8% WACC. These are based on NSE’s historical growth trends since management hasn’t issued a specific forward guidance.
5. What could cause this valuation model to be wrong?
If market participation increases — including more retail and NRI participants — or NSE opens new revenue avenues, transaction volumes and revenue growth could exceed the 20% assumption used here, which would raise the estimated fair value above ₹1,232.
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