As executives at the National Stock Exchange of India Ltd. pitched their long-awaited initial public offering to global investors, one question kept coming up: How would the bourse keep growing after regulators curbed its booming derivatives business?
Without that growth engine, investors at meetings in Hong Kong, London and New York expressed concern that the valuation NSE was seeking — roughly $55 billion — was just too high, according to people who attended the meetings. That investor pressure ultimately forced NSE executives to slash the maximum valuation they’re seeking when they launch the IPO next week by about 15%, other people involved in the deal said, requesting anonymity as the information is private. Still, even at that new price tag of $47 billion, NSE shares would be more expensive than the top 10 global exchanges, based on earnings for the last fiscal year.“NSE seems quite expensive over the short to medium term when compared to other exchanges globally,” said John Ninia, a partner at Mobius Investments, citing tighter trading rules as a risk to derivatives volumes. “As a long-term investor, we would find the risk/reward more attractive following a valuation reset.”
A decade in the making, NSE’s listing has been slowed by regulatory setbacks and legal hurdles. The regulator’s crackdown last year on Jane Street Group, coupled with other measures to curb excessive speculation, has cooled the derivatives market that had made India the world’s leading options hub.
The backdrop has also become less favorable, with investors flocking to AI stocks that India lacks while spiking oil prices and a delayed trade deal with the US add pressure to the economy. The IPO will still draw plenty of attention given the country’s importance in emerging-market portfolios — more than 120 global funds including BlackRock Inc. and GQG Partners LLC attended the meetings — but the investor excitement that was so palpable early last year has faded.A similar story played out earlier this month in Hong Kong, where Shein Global Holdings Ltd.’s IPO came well past its growth peak. Its shares plunged as much as 10% after they began trading and remain well below the IPO price today, an outlier at a time of frenetic post-IPO rallies across much of Asia.
NSE is preparing to go public with a price band of 1,700 rupees to 1,785 rupees a share, according to the people involved in the deal. At that valuation, the bourse would rank eighth among global peers by market value. The exchange may reduce the stake being offered to 5.5% of total equity capital, versus the 6% planned previously, they said. At the top end of the proposed range, the sale of the 5.5% holding — entirely by existing shareholders — would total about 243 billion rupees ($2.6 billion), below the record 279 billion rupees raised by Hyundai Motor Co.’s Indian unit in 2024.
The valuation was central to discussions at roadshows overseas. Investors were interested but divided over the outlook, with some questioning the impact of tighter regulation, people familiar with the meetings said, asking not to be identified because the discussions are private.
Investors pressed NSE executives and bankers on how much of the exchange’s future growth was already priced in, and whether the exchange could sustain the pace of the past decade, the people said.
At the top end of the proposed range, NSE is valued at about 43 times its fiscal 2026 earnings. That multiple would make it the most expensive among the world’s 10 largest listed exchanges. The top four peers trade at about 24 times earnings, data compiled by Bloomberg show.
At the roadshows, NSE’s management argued that the exchange is growing much faster than global peers, so the comparison isn’t fair, the people said. Some investors disagreed, saying the exchange may deserve a discount because Indian regulators intervene more than their counterparts elsewhere. A spokesperson for the exchange didn’t respond to a request for comment.
More regulatory action could hurt that valuation. Retail investors lost over $40 billion in equity derivatives over five years through March 2026, according to the Securities and Exchange Board of India, drawing greater scrutiny of a market that pits small traders against global firms. Jane Street has denied the regulator’s market-manipulation charges and is seeking access to additional documents in an Indian court.
Derivatives trading has been very profitable for NSE. The exchange reported net income of 103 billion rupees on revenue of 166 billion rupees in the year ended March 2026, generating a profit margin of about 62%. While that has narrowed from about 71% a year earlier, according to the IPO prospectus, it remains above most large global peers.
Options trading is at the heart of its profitability, accounting for about 60% of operating revenue in the year ended March. That model is becoming harder to sustain.
Smaller rival BSE Ltd. is gaining market share in the options segment, and the central bank’s new curbs on lending to proprietary trading firms threaten a key source of trading volume. The average daily notional turnover for futures and options on the NSE hit a 18-month low in August, according to exchange data.
Some of NSE’s earliest investors see it differently. They’re staying put despite gains of more than 1,000% at current unlisted-market valuations.
Vinit Bodas, founder and chief investment officer of Deccan Value Investors LP, which owns 1.83% of NSE, calls the exchange “a call option” on India’s growth. Life Insurance Corp. of India and a fund backed by technology mogul Azim Premji are among those holding on.
Morgan Stanley, Temasek Holdings Pte. and State Bank of India are among shareholders set for a big payday from the IPO, according to the draft prospectus. Global funds, which held a 31.35% stake in the bourse as of Dec. 31, 2021, have since reduced their ownership to 26.41% as of June 2026.
NSE’s growth began with the transformation it brought to India’s markets when it launched in the 1990s.Founded after a 1992 stock-market scandal sparked systemic reforms, the NSE took on the then-dominant Bombay Stock Exchange by introducing electronic trading in 1994. BSE followed a year later, ending its century-old trading ring where brokers shouted orders.
“It emerged as a strong competitor, which significantly improved market efficiency and transparency for investors,” said Deena Mehta, a broker who became BSE’s first female president in 2001. NSE offered products familiar to global funds, helping to draw overseas investors and turn India into a global leader in equity derivatives, she said.
By 2016, NSE was ready to list. The plan stalled after SEBI raised questions about a controversy in which some brokers with servers co-located at the exchange allegedly gained faster access to data feeds. Years of litigation and regulatory proceedings followed, along with an overhaul of its top management. The path to a listing cleared in January this year when SEBI granted its approval, followed by a 14.91-billion rupee settlement in July to resolve past disputes.
The IPO may have been stuck, but the business kept growing. More Indians moved their savings into equities and began trading derivatives, and NSE’s value rose sharply in private markets.
That expanding pool of investors remains a powerful long-term tailwind. It gives the NSE more customers to tap, even if derivatives growth slows.
Still, the exchange’s upside in some markets is partly capped by its already dominant position. In fiscal 2026, NSE had a 74.71% share of equity options, 92.99% of cash equities and 99.48% of exchange-traded currency futures, according to its prospectus.
With several of those markets under pressure, the exchange needs to look for new sources of revenue.
Commodity derivatives are one option. The exchange could use its technology and its relationship with brokers to challenge established local rivals such as the Multi Commodity Exchange of India Ltd.
Data is another. The world’s biggest bourses, including Nasdaq, have built businesses that are less dependent on trading. NSE has similar data and analytics assets it could tap.
Given the regulatory uncertainty, “the positive surprise could come from non-transaction revenue such as index licensing and data services,” said Jian Shi Cortesi, fund manager at Gam Investment Management in Zurich.
Some investors including Mike Sell, head of global emerging markets at Alquity Investment Management Ltd., see more upside in digital stock-broking platforms benefiting from rising household investments than in exchanges.
That makes NSE a tougher sell than it was a decade ago. The bourse remains the dominant player, but investors now have more ways to gain exposure to India’s shift toward financial assets.
For Andrei Stetsenko, partner at New York-based investment advisory firm Farley Capital LP, the problem is NSE’s size.
“Unless you are a goliath for whom only double-digit billion dollar companies are big enough to move the needle, there are better values on offer in the Indian market,” he said.
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