India’s largest stock exchange, the National Stock Exchange (NSE), reported a robust 57% year-on-year (YoY) increase in its Q2 FY25 profit after tax, reaching ₹3,137 crore. This performance surge comes as the NSE, set to debut its much-anticipated IPO next year, continues to strengthen its revenue streams and manage costs effectively. This profit growth is largely attributed to an 8% reduction in total expenses alongside rising revenue across various operational areas, indicating strong performance ahead of its listing on the public market.
NSE sees strong revenue gains in Q2 FY25
For the quarter ending in September, NSE’s operating revenue climbed 24% YoY to ₹4,510 crore, bolstered by revenue diversification beyond traditional trading. The exchange’s revenue from operations saw contributions from several streams, including clearing services, data centre and connectivity fees, listing, index, and data services. These additional revenue sources have supported the NSE’s operational stability and profitability.
NSE’s Q2 expenses fall 8% YoY, boosting profit margins
In a strategic move to optimise profitability, NSE reduced its total expenses for Q2 by 8% YoY, bringing them down to ₹1,303 crore. This drop was due primarily to lower regulatory and settlement fees, including a ₹670 crore payment towards SEBI settlement fees and ₹58 crore regulatory fees. A decrease in additional contributions to the core Settlement Guarantee Fund (SGF) also contributed to the reduction. Consequently, the net profit margin for Q2 FY25 improved, at an impressive 62%.
NSE trading volumes show robust growth
NSE’s trading volumes grew substantially in Q2, demonstrating investor confidence and market vitality. The average daily traded volume (ADTV) in cash markets rose to ₹1,29,194 crore, up 66% YoY. Equity futures also saw a significant jump, with an ADTV of ₹2,01,547 crore (64% YoY), while equity options recorded ADTVs of ₹65,648 crore, marking an 8% YoY increase. These figures underline the strong trading activity across market segments and reflect the NSE’s dominant position in India’s financial ecosystem.
NSE’s significant exchequer contributions and IPO plans
NSE contributed a total of ₹30,130 crore to the Indian exchequer in H1 FY25. This includes ₹24,755 crore from securities transaction tax (STT) and commodities transaction tax (CTT), with 64% derived from cash market transactions and 36% from equity derivatives. Additional contributions came from stamp duty, SEBI fees, income tax, and GST.
Looking ahead, NSE is preparing for an estimated ₹30,000 crore IPO in 2024, which could potentially involve a 10% equity sale. Major stakeholders like LIC (7.2%), Stock Holding Corporation (4.44%), SBI Capital Markets (4.33%), State Bank of India (3.23%), and Temasek Holdings (5%) could benefit from the listing. Once approved, the IPO is expected to provide retail and institutional investors an opportunity to hold shares in India’s leading stock exchange.
As NSE readies itself for a pivotal year with the anticipated IPO, the exchange’s strong Q2 performance highlights its market dominance and efficient cost management, setting a promising trajectory for 2024.
