New Delhi [India], October 29 (ANI): The National Stock Exchange of India's operating revenue could grow at a compound annual rate of 15 per cent between FY27 and FY29, with new businesses potentially adding another 15 per cent to earnings by FY30, according to a report by Jefferies.

The brokerage said the exchange's growth could improve after regulatory changes and higher taxes weighed on its equity derivatives business over the past two years. It expects revenue growth to be supported by a recovery in equity options, higher cash-market trading and an expansion of technology-related services.

"With regulatory headwinds in the past, we expect a 15% revenue CAGR over FY27-29e," Jefferies said in its report initiating coverage of NSE.

The brokerage estimates operating revenue to rise from Rs 166,013 crore in FY26 to Rs 173,929 crore in FY27, Rs 198,442 crore in FY28 and Rs 230,294 crore in FY29. It also expects earnings per share to increase from Rs 42.57 in FY26 to Rs 62.08 by FY29.

Jefferies said NSE's dependence on weekly index options was lower than commonly perceived, noting that these products account for around 40 per cent of operating revenue.

It expects the share of equity options in transaction revenue to decline from 60 per cent currently to 50 per cent over the next five years as the exchange expands other businesses.

New growth opportunities include commodity derivatives, electronic gold receipts (EGRs) and a mutual fund order platform. Together, these businesses could add around 15 per cent to revenue and profit after tax by FY30, although the estimates are not included in the brokerage's base-case projections.

The report also expects NSE's technology infrastructure business to grow as it adds more co-location racks, which allow trading participants to place their servers close to the exchange's systems.

Jefferies estimates NSE's data and technology revenue to grow at 20-23 per cent annually until FY29, supported by higher utilisation of co-location racks and the addition of 600 racks over two years.

Operating margins could expand by 200 basis points to 78 per cent by FY29, supported by revenue growth and the benefits of investments in technology and employees, the report said.

However, the report flagged further regulatory tightening in equity options, cyberattacks and disruption to market benchmarks as key risks to its outlook.

Jefferies has assigned a 'Buy' rating to NSE with a price target of Rs 2,085, compared with the market price of Rs 1,777 cited in the report, implying an upside of around 17 per cent. (ANI)