Stocks to buy today | Jefferies India stock recommendations | Shares to buy today: The NSE shares have been reeling under the upper price band of ₹1,785 after hitting the record high of ₹1,878 per share on the listing date. NSE share price finished at ₹1777.05 per share on the BSE on Wednesday. However, Jefferies India is still bullish on NSE shares, provided there is a trend reversal on Dalal Street. The global investment bank has set the NSE share price target of ₹2,300 for long-term investors in the upside scenario. The Jefferies India report has also noted that, in the event of a downside trend, the NSE share may touch ₹1,600. In the base-case scenario, the NSE share price may touch ₹2,085 apiece, delivering around 17% returns to long-term investors.
Calling NSE a hedge against volatility, the Jefferies India report said that India has seen a 4x increase in direct equity investors since COVID, led by younger cohorts. Yet penetration is only 3% of the population vs. 18% in China. Besides structural tailwinds, exchanges offer a volatility hedge, as revenue is positively correlated with the VIX, given that options revenue is premium-based, unlike that of global peers.
“NSE is the market leader in cash equities, index F&O, stock F&O, and clearing & settlement. While c.60% of operating revenues come from equity options, weekly index options, which have faced regulatory action, account for 40% opposit revenues (BSE: 65%). Low-turnover clients account for only 2-3%, limiting the risk from SEBI action to protect small traders. We see the equity options share in transaction revenues to fall to 50% from the current 60% over the next 5 years,” the Jefferies India report said.
Expecting fast growth in the NSE's revenue, Jefferies India said that the NSE's operating revenue CAGR was 6% between FY24-26, as its equity F&O business was adversely impacted by regulatory changes and higher taxes. We think these are now largely in the base. Hence, expect growth to improve to 15% over FY27-29e, driven by (1) equity options market share stabilising at 65%, (2) cash equity turnover growing at 16% led by IPOs, promoter/PE sell-downs, and (3) tech infra revenues growing at 23% CAGR.
Pointing towards the new avenues for revenue for the NSE, Jefferies India said, "NSE's tech infra revenues, 8% of FY26 opposite revenues and at lower AI risk, could rise to 11% by FY29e as the company adds more colocation racks (JEFe: 600 racks in 2 years). Commodity F&O, the new mutual fund ordering platform and EGRs (Electronic Gold Receipts) could add another c.15% to revenue/PAT by FY30e, which are not part of our base case. NSE is also exploring opportunities in corporate bond futures, GIFT City and Market Lens."