The National Stock Exchange of India's (NSE) financial report for Q2 FY26 reveals a dramatic 33% plunge in net profit, settling at ₹2,098 crore. But here's the twist: this significant drop is primarily attributed to a one-time provision related to settlement applications with the Securities and Exchange Board of India (SEBI).
NSE, the operator of India's largest stock exchange, disclosed a provision of ₹1,297 crore, inclusive of interest, for the aforementioned settlement applications concerning Colocation and Dark Fibre issues. This provision alone accounts for the majority of the profit decline. Without this exceptional charge, NSE's consolidated net profit for the quarter would have been a robust ₹3,395 crore.
However, the story doesn't end there. NSE's revenue from operations took a hit as well, shrinking by 18% year-on-year to ₹3,677 crore. This decline in revenue, coupled with the one-time provision, paints a challenging picture for the exchange's financial health.
And this is where it gets even more intriguing. The consolidated EBITDA for the quarter plummeted by a staggering 56% to ₹1,484 crore, with the EBITDA margin narrowing to 40% from 74% YoY. Such a substantial drop in profitability metrics is bound to raise eyebrows.
But wait, there's more. The reported Earnings per Share (EPS) for Q2FY26 was ₹8.48, a notable decrease from the previous quarters. And here's the part most people miss: this EPS figure is after considering the bonus equity share issuance in Q3FY25, which further dilutes the earnings per share.
NSE's contribution to the government's exchequer during H1FY26 was substantial, totaling ₹28,308 crore, primarily from various taxes and fees. Yet, the decline in trading volumes and revenue raises questions about the overall market sentiment and the exchange's ability to maintain its financial prowess.
The average daily traded volume in the cash market segment witnessed a 12% QoQ decline, while the equity futures and options segments saw even steeper drops of 16% each. These figures suggest a potential shift in investor behavior or market dynamics, which could have far-reaching implications.
The NSE's financial performance in Q2 FY26 presents a complex narrative, with a substantial profit decline due to one-off provisions and a simultaneous drop in revenue and profitability metrics. This raises questions about the exchange's short-term financial outlook and the broader market environment.
Disclaimer: The analysis provided is an interpretation of the financial data and should not be construed as investment advice. Investors are encouraged to conduct thorough research and consult professionals before making any investment decisions.
