NSE’s first quarterly results show how much of its income depends on one product: weekly Nifty options.
The National Stock Exchange reported consolidated net profit of ₹2,578 crore for the September quarter, up 23% from ₹2,098 crore a year earlier. Total income rose 9% to ₹4,554 crore. Revenue from operations rose 10.6% to ₹4,067 crore.
These are NSE’s first results since it listed on the BSE on 24 September. Its ₹22,562 crore IPO, entirely an offer for sale by existing shareholders including SBI, Canada Pension Plan Investment Board and Morgan Stanley’s investment arm, was subscribed 5.71 times. The shares listed at ₹1,800, just 0.84% above the issue price of ₹1,785, and closed the first day at ₹1,818.
Profit growth
Most of the year-on-year increase comes from costs, not revenue. Total expenditure fell 51% to ₹1,161 crore from ₹2,354 crore. The year-ago quarter included a ₹1,297 crore provision for NSE’s settlement with SEBI over the colocation and dark fibre cases. Without that one-off charge in the base, the comparison would look much less impressive.
Excluding that provision, profit in the year-ago quarter was about ₹3,396 crore. By that measure, this quarter’s ₹2,578 crore is lower than a year ago.
Core income grew modestly. Transaction charges, NSE’s main source of revenue, rose 9% to ₹3,035 crore, helped by higher cash market and options volumes. Standalone profit rose 16% to ₹2,164 crore.
The quarter-on-quarter figures are weaker. Consolidated profit fell 17.4% from ₹3,120 crore in the June quarter. Revenue from operations fell 10.8%, and transaction charges fell 16% from ₹3,623 crore.
That reflects the July–September market: the worst period of the Iran war’s effect on Indian shares, record foreign selling, and lower retail trading. Exchange earnings closely follow market activity.
Concentration risk
The most important figure was in the earnings call. Transaction charges from options rose 6% to ₹2,216 crore, and revenue from weekly Nifty index option expiries alone was ₹1,699 crore, 38% of NSE’s total income.
Over a third of the income of India’s largest exchange comes from one product: very short-term options on the Nifty that expire every week, traded mostly by retail investors. SEBI has spent two years tightening rules on this segment, citing studies showing most retail traders in it lose money.
That is the main risk for NSE shareholders. Any further SEBI restriction on weekly expiries would directly affect almost two-fifths of NSE’s income. When investors value NSE, they need to consider that exposure alongside its very high margins.
Growth in other businesses
NSE’s smaller businesses are growing faster. Data feed and terminal services rose 43% to ₹165 crore, and listing services rose 70% to ₹150 crore, helped by record IPO activity. NSE Clearing’s income rose 16% to ₹1,153 crore. NSE Data & Analytics grew 45%. NSE Indices grew profit 9% to ₹63 crore.
These businesses are much smaller than options trading, but they are the type of steady, less cyclical income that would reduce NSE’s dependence on derivatives.
The board approved selling a 40% stake in NSE’s coal exchange subsidiary, a market that has gained importance as India relies more on coal during the energy crisis. Management also said SEBI’s proposed reforms to securities lending and borrowing could increase cash market activity by making short-selling easier, which would increase NSE’s cash market revenue.
Margins and government revenue
For the first half, profit rose 13% to ₹5,698 crore and operating EBITDA rose 45% to ₹6,674 crore, a 77% margin. NSE contributed ₹41,234 crore to the government in the first half, including ₹34,788 crore of securities and commodities transaction tax, 55% of it from equity derivatives.
The government collects significant revenue from derivatives trading, while SEBI tries to limit it. NSE’s earnings now also depends on how that friction evolves over time.
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