In today’s Finshots, we discuss why NSE’s share price is rallying in the unlisted market.

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The Story

You probably won’t find it on your trading app. You can’t track a chart. And yet, NSE’s stock is on fire. That’s because in the unlisted market, that underworld of off-market share transfers and private deals, its stock has zoomed in the past one year and doubled since 2021. The funny part? Most folks have no clue how to buy it. And yet, over 1 lakh investors already hold NSE shares.

So what on earth is going on?

Well, for starters, NSE’s finally making serious moves toward going public.

Just days ago, its MD & CEO Ashish Chauhan confirmed that they’ve formally asked SEBI for a No Objection Certificate (NOC), the first real step to filing for an initial public offer (IPO).

But what’s even juicer is the fact that the exchange is now proposing ₹1,000 crore to settle its long-running regulatory mess. And if SEBI accepts the deal, it could clear the decks for public listing.

To jog your memory, NSE was ready to hit the public markets with a ₹10,000 crore issue back in 2016. But then its co-location crisis was uncovered.

What’s this co-location scam, you ask?

Well, NSE seemingly offered some brokers preferential access to data, allowing them to profiteer from buying and selling stocks on the exchange. By some estimates brokers raked in profits to the tune of 50,000 crores. So, the fallout was swift. SEBI launched investigations, slapped fines and unearthed a whole mess in 2022 — including the now-infamous episode where then-CEO Chitra Ramkrishna shared confidential info with a “Himalayan Yogi.” And just like that, NSE’s IPO was put on indefinite hold.

But now, NSE is trying to put that behind. It paid ₹643 crores last year to settle the co-location case, worked on its governance issues, handed out bonus shares and even declared fat dividends to keep investors pleased. In March 2025, SEBI set up an internal committee to examine its IPO readiness. And with this new ₹1,000 crore offer on the table, NSE’s message is loud and clear: Let’s bury the past and move forward.

SEBI, for its part, appears receptive too. Chairman Tuhin Kanta Pandey recently hinted that the regulator was keen to resolve the issues and allow India’s largest exchange to go public.

Now, this matters because for investors tracking NSE’s unlisted shares, this is the final piece of the puzzle. If SEBI nods, the public listing may finally see daylight and it turns into a “pre-IPO play” with real timelines and price anchors.

And in private markets, IPOs are the payday. If an IPO is three years away, investors apply a heavy discount to the price, maybe 10–15% per year, because the exit is far and money today is worth more than money later. But if a listing is just 6–12 months away, that discount would shrink. Expected returns shoot up, which alone can push the unlisted share prices higher. Exactly what’s happening now.

But it’s not just about the IPO buzz.

You see, NSE’s fundamentals are rock solid. It’s not just a stock exchange. It’s the infrastructure powering India’s financial markets. Every time you buy or sell a stock, NSE earns a fee. And since it handles over 90% of all equity cash segments and about 80% of the derivatives segment trades in India, those tiny fees add up big. Fast.

And that’s just the base layer. Brokerages pay NSE to access its data. High-frequency traders rent co-location racks in its server rooms. Mutual funds tracking Nifty pay licensing fees. IPO aspirants pay listing fees. Clearing members pay clearing charges.

So yeah, almost everything that’s in the market passes through the company’s business which seems to be a compounding machine with low capital intensity. There’s no debt and the business doesn’t need to pour billions into factories or raw materials. Most of its expenses are digital: servers, co-location racks, data infrastructure and people. Which means, every incremental rupee of revenue flows beautifully down to the bottom line.

And that’s why it’s incredibly profitable. The numbers speak for themselves.

NSE’s total income surged 17% from a year ago to ₹19,177 crores in FY25. Of this, a whopping ₹17,141 crores came from its core operations. Now layer in the margins. NSE’s operating profit hit over ₹12,600 crores. That’s a 74% margin. And its bottom line? ₹12,188 crore, which is a 47% jump year-on-year with a net profit margin of about 60%. Return on equity (ROE) is also a blistering 45% in FY25, up from 37% in FY24. And NSE operates at just about 8% of its current tech capacity, so there’s still headroom to scale without breaking a sweat.

In short, it’s the kind of business investors dream of. A business with growing profits, high margins, fat dividends and a digital-first, asset-light model. Plus, valuations also look great when compared to its peer BSE. So naturally, the grey market can’t get enough. Especially when they hear whispers that the IPO might be back on the table.

But here’s the thing. Buying NSE shares is still a maze. Unlike listed stocks, you don’t just click “buy”. You go to wealth managers and brokers who then negotiate with a seller. Sign off on paperwork. Submit KYC. Pay via escrow. Then wait for weeks for the stocks to show up in your account. And even if you want to sell, good luck finding a buyer, especially if the IPO gets further delayed.

Plus, most of the recent surge is also the result of a classic short squeeze.

You see, brokers have been betting that NSE’s unlisted share price would stay flat. So they shorted the stock i.e. selling shares they didn’t own, hoping to buy them back cheaper later. Some even promised future deliveries without actually owning the shares.

But when the recent IPO chatter broke, the price jumped from ₹1,500 to ₹2,050 in just two days. Panic kicked in. Brokers scrambled to cover their short positions by buying back shares at inflated prices to close their positions. And the potential delivery defaults are said to cross over ₹5,000 crores!

And this exposes the underbelly of India’s unlisted markets, where nearly ₹4,000 crore worth of NSE shares change hands each quarter. What happens if the IPO price doesn’t match the hype? After all, when investors are paying top rupee, the actual listing price needs to justify all that patience, yeah?

Because while NSE’s fundamentals may justify a premium, every bull run ends with someone holding the bag.

Still, one thing’s clear. Most people chase companies hoping they’ll become monopolies. NSE already has one. And unlike most businesses, its margins don’t shrink but expand as it scales.

Globally, that’s the game. CME, which runs the Chicago Mercantile Exchange, made $3.7 billion in profits last year. ICE, which owns the NYSE, earned over $9 billion in revenue with most of it coming from data, software and tech infra. And NSE is playing the same game, just in Indian rupees.

So yeah, everyone’s waiting now. For the SEBI nod. After which the exchange will file the IPO DRHP. And finally, the price band.

And maybe that’s the irony here. The company that powers India’s capital markets is fast becoming the most valuable stock that retail investors still can’t buy. At least… not yet.

Until then…

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