Tracking NSE's performance: Key things to know about the world's largest derivatives exchange

The National Stock Exchange (NSE), which reported its fourth quarter (Q4FY23) results earlier this week, has performed better than its big global and domestic peers, ending financial year 2023 on a strong note. For the last five years, the exchange has clocked more than 35 percent growth in both revenue and profit, and is still trading near 21 times trailing earnings versus global averages of 27 times.

India's leading stock exchange posted a 19 percent year-on-year growth in standalone net profit for the March quarter at Rs 1,810 crore. The exchange reported a strong 32 percent on-year growth in operating income at Rs 3,295 crore. The board has also recommended a dividend of Rs 80 per share for FY23, amounting to a payout of Rs 3,960 crore.

For the year ended March, NSE reported total operating income of Rs 11,181 crore, registering a growth of 44 percent year-on-year (YoY) against the last fiscal.

At the operating level, the exchange saw its margin dip to 69 YoY in the March quarter, from 73 in the corresponding quarter last year. Net profit margins were maintained at 51 percent.

On the trading volumes front, the cash market recorded average daily traded volumes (ADTVs) of Rs 53,694 crore, down 20 percent year-on-year, while the equity futures segment saw a 3 percent decline to Rs 1.15 lakh crore. However, options ADTVs at Rs 47,744 crore (premium), registered a growth of 73 percent year-on-year.

At the consolidated level, NSE reported a 31 percent YoY growth in consolidated net profit at Rs 2,067 crore for the March quarter. Consolidated income from operations stood at Rs 3,453 crore for the quarter, up 31 percent YoY.

A look at NSE vs global peer and what valuations they are commanding.

The revenue growth of NSE between FY19-FY23 is 3.5 times of global average, whereas the profit growth is 10.6 times.

Other exchanges with double-digit growth in both revenue and profit include the London Stock Exchange, Euronext NV and Deutsche Boerse.

NSE is the largest exchange of India and the world’s largest exchange of derivatives.

NSE vs Indian peers

NSE unlisted is quoting around Rs 3,000-3,200 per share, commanding a market capitalisation of Rs 14,800-158,400 crore and trading at 20-21 times trailing FY23 EPS.