NSE IPO: Trading volume risk to cybersecurity threat; key risks investors should know from DRHP

While investors focus on the complete offer for sale (OFS) public issue and the upsides of a capital market stock due to the rising investor base of the Indian stock market, people should also look out for key risks which can potentially impact NSE’s operations.

If approved by SEBI, the NSE IPO is set to potentially be one of the biggest initial public offerings in the Indian market.

What are the prominent risks of NSE IPO?

“While supportive government and regulatory action have historically expanded market access and driven trading activity on our platform, policy interventions can also be restrictive,” said NSE in its DRHP filing.

Any update of an inspection can potentially impact the stock price due to the investors' sentiment in the market.

On May 17, 2023, NSE was subject to a Securities Appellate Tribunal (SAT) order where the company and certain employees received a notice alleging connivance and collusion of OPG Securities Private Limited and its directors with employees or officials of NSE.

The case was disposed off by SEBI later in 2024 due to the absence of sufficient evidence and failure to justify the establishment of any connivance or collusion of the parties. Other proceedings have also resulted in the company paying penalties and charges for several issues.

“Our business significantly depends on revenue from trading activities and, in turn, we earn the majority of our trading revenue from our options and futures businesses,” said NSE in its DRHP filing.

“Our clearing corporation operations expose us to financial, operational, counterparty and systemic risks arising from our relationships with, and dependencies on, clearing members, depositories and other market infrastructure participants,” said NSE in its DRHP filing.

“If market data disseminated by us contains undetected errors, this could also have a material adverse effect on our business, financial condition, or results of operations,” said NSE.

What are NSE’s revenue streams?

NSE earns its income from several business activities; however, the majority of the company’s income comes from the transactional charges, which make up for 78.65% of the total revenue from core operations as of the financial year ended 2025-26.

The data showed that NSE earned ₹13,057.01 crore from transactional charges in the fiscal year ended 2025-26, marginally lower when compared to ₹13,635.76 crore in the previous financial year.

After transactional charges, NSE earns the most from data connectivity charges (6.8% of revenues), followed by data feed and terminal services business (2.83% of revenues), as per the DRHP data.

NSE also carries out other business activities like providing listing services, Data Centre - Rack charges, Licensing services, Cleaning & Settlement services, and other services.

Things to know before you invest in NSE IPO

National Stock Exchange (NSE) is looking to issue up to 14,89,05,525 equity shares with a face value of ₹1 per share as the stock exchange services provider aims to raise funds from the Indian stock market investors via a fully offer for sale (OFS) initial public offering (IPO).

According to several media reports, the NSE IPO is estimated to be valued at around ₹30,000 crore in the unlisted market, potentially set to become one of the biggest-ever public issues after the capital markets regulator gives its approval.

All proceeds raised from the IPO will be used to pay the corporate selling stakeholders, as it is an OFS issue. As there is no fresh issue component in the company’s IPO round, the funds raised will not be used for the company's capital requirements.

Existing shareholders like State Bank of India, New India Assurance, MS Strategic Mauritius, Canada Pension Plan Investment Board, and General Insurance were among other corporate selling stakeholders offering shares in the NSE IPO round.

NSE is looking to allocate not more than 50% of the IPO shares to the qualified institutional buyers (QIBs), not more than 35% to the retail investors and the remaining 15% to the non-institutional investors (NIIs) via the open market bidding.

The company will release its IPO dates and listing details after the capital markets regulator, SEBI, approves its preliminary prospectus, giving the final approval to go ahead with the public issue round.