NSE DRHP: Valuation benchmark tightens for BSE in 2026

Why the NSE DRHP matters for listed exchanges

NSE’s draft red herring prospectus (DRHP) filing has moved its long-awaited IPO from market expectation to a formal process. For years, BSE benefited from being the only listed, pure-play Indian exchange, giving investors limited domestic alternatives for this business model. With NSE now preparing to go public, the market will soon have a direct, priced benchmark to compare India’s two exchange operators.

Analysts cited in the report said the near-term reaction in BSE’s stock has been driven less by operations and more by what a listed NSE means for valuation discipline. Once both are listed, investors can choose between the two, and the comparison will become more transparent on profitability, growth, and multiples.

“Knee-jerk reaction”, but limited structural change to BSE

Paresh Bhagat, Chairman of Mangal Keshav Financial, described investor reassessment of BSE holdings as a “fairly natural knee-jerk reaction” after the NSE filing. But he argued that structurally, not much changes for BSE’s core business solely due to the filing.

A key point in the DRHP is that the issue is a pure offer-for-sale. That means no fresh capital flows into NSE from the IPO, and it is primarily a transfer of existing shareholders’ stakes. NSE also said its equity shares are proposed to be listed on BSE Limited, which will be the designated stock exchange for the offer.

Event already priced in, focus shifts to earnings delivery

One view highlighted in the report is that most positives tied to NSE’s eventual listing were already reflected in BSE’s stock. The re-rating in recent years was linked to BSE’s own earnings trajectory, gains in derivatives market share, and expectations around the NSE listing.

Analysts do not expect a meaningful further re-rating in BSE purely because NSE has filed its DRHP. Choudhary said the more important driver from here is earnings delivery rather than event-led optimism. The argument is that if BSE continues to expand its derivatives franchise, sustain operating leverage, and deliver profit growth, shareholder value creation can come more from business performance and earnings upgrades than from the IPO trigger itself.

A constructive read: uncertainty ends, a benchmark emerges

Ishan Tanna, Senior Associate at Ashika Capital, offered a more constructive near-term interpretation for BSE. He said the DRHP filing removes a decade-long uncertainty around NSE’s listing and creates a direct valuation benchmark for India’s exchange industry. In his view, that could initially work in BSE’s favour by drawing more attention to capital market infrastructure businesses and reinforcing the structural growth opportunity linked to rising financialisation in India.

At the same time, Tanna cautioned that once NSE is listed, investors are expected to compare valuation, growth prospects, and profitability metrics more closely. That raises the importance of valuation discipline for BSE going forward. He added that the investment decision should be driven more by valuation and investment horizon than by the IPO timeline itself, and that waiting solely for the NSE IPO could mean missing opportunities elsewhere in the sector.

Valuation math: NSE at ₹5 lakh crore and the BSE premium

Centrum Broking’s view, as shared by Mohit Mangal (Vice President) on CNBC TV18, is that NSE at an expected market capitalisation of around ₹5 lakh crore trades at about 36x FY28 earnings. On that basis, Centrum estimates NSE is at a 15-20 percent discount to BSE’s valuations.

Separately, the report also cites a broader expectation for the NSE IPO valuation in the range of about ₹4.7 lakh crore to ₹6 lakh crore, based on institutional share transfers and grey market trades ahead of the DRHP filing. Another stated implied valuation range was roughly ₹4.2 lakh crore to ₹6.25 lakh crore, using a midpoint issue size assumption of ₹21,000-₹25,000 crore and expected equity dilution of 4-5%.

Profitability comparison is likely to drive the debate

The more fundamental concern flagged for BSE is the unavoidable post-listing comparison on profitability and scale. The data cited shows NSE with higher margins: PAT margin of 62.9% versus BSE’s 52.3%, and EBITDA margin of 76.5% versus 64%.

One analyst view in the report notes the comparison can look “unflattering” on one count: NSE generates nearly four times BSE’s profits at higher margins, yet could list at a lower valuation multiple. That gap could pressure the premium BSE has historically commanded, or it could also validate investor interest in exchange businesses as a category.

Regulation and market structure: weekly expiry restriction

PL Capital pointed to a structural change that has affected the derivatives landscape: restricting all exchanges to a single weekly expiry contract per benchmark index. PL Capital said this has impacted NSE more because it previously had four weekly expiries compared to two for BSE.

PL Capital also said BSE has emerged as a stronger player in equity derivatives after the relaunch of Sensex and Bankex weekly contracts. Over FY23-26, BSE saw an 80%+ CAGR in operating revenue, led by the ramp-up of index options. The brokerage cited improved liquidity, expiry positioning, and higher participation, translating into a premium market share of 28% and premium-to-notional of 10 bps in FY26.

Where BSE’s valuation is positioned, according to brokerages

PL Capital noted that over the past five years, BSE has undergone continuous re-rating supported by market share gains and improving profitability, and was trading at 49x 1-year forward P/E (BBG). PL Capital said it expects valuation to sustain at these levels, citing factors such as a duopolistic market structure with high entry barriers, healthy profit growth of about 27% CAGR over FY26-FY28E, and optionality from new derivative products and colocation revenues.

PL Capital maintained a ‘Buy’ with a target price of ₹4,850, valuing BSE at 50x FY28E P/E using a Residual Income framework.

The article also references BSE trading at 69x/50x FY26/FY27E P/E, with a likely 29% EPS CAGR between FY26 and FY28. It adds that analysts have cut BSE’s FY27 and FY28 earnings estimates ahead of the DRHP, with consensus target prices below current BSE share price levels.

Unlisted NSE signals, and how they feed into IPO expectations

The report also cites unlisted-market indicators. Nitant Darekar, research analyst at Bonanza (as quoted by ET), said that at around ₹1,950-₹2,170 in the unlisted market, NSE trades near 45x FY26 earnings. Darekar added that is below BSE at around 70x and MCX at around 80x.

Another valuation framing in the report assumes an IPO price band of ₹1,600-₹1,800 for NSE, implying about 38x to 43x FY26 P/E, presented as cheaper than BSE.

Key numbers at a glance

Market impact: what changes for investors now

BSE’s share price came under pressure after the DRHP filing because it marks the approach of a direct, publicly traded comparable. The report says NSE’s listing is expected before December 2026, and until then the focus is likely to stay on relative profitability, growth, and valuation multiples.

For investors, the practical change is that exchange stocks move from a “scarcity premium” setup to a relative-value framework. Once NSE lists, institutional and retail investors can hold either exchange stock, and portfolio decisions may reflect which business offers better profitability metrics and growth at a given multiple.

Analysis: why the DRHP shifts the conversation

The filing does not, by itself, change BSE’s balance sheet or NSE’s capital position, because the IPO is described as an offer-for-sale. But it changes the reference point investors use to justify paying premium multiples for exchange businesses.

If NSE lists at a lower multiple despite higher margins and larger profit scale, BSE’s valuation premium could face scrutiny, especially if earnings upgrades do not keep pace with the multiple. On the other hand, if investors treat the listing as validation of the sector and maintain premium valuations for both, the headline impact may be less about de-rating and more about ongoing execution and relative earnings outcomes.

Conclusion: a benchmark is coming, and earnings will do the work

NSE’s DRHP has turned a long-running market expectation into a process, setting up a direct valuation contest for BSE. Analysts quoted in the report broadly agree that the next leg for BSE is more likely to be driven by derivatives performance, operating leverage, and profit growth rather than the DRHP event itself.

With NSE’s listing expected before December 2026 and the shares proposed to be listed on BSE, investors are likely to track margins, market-share metrics, and valuation multiples more closely as the IPO timeline advances.