NSE's September Quarter: 93% Cash Market Share, a 76% Operating Margin, and an EBITDA Jump of 107% That Mostly Reflects a Year-Ago Provision

National Stock Exchange of India reported consolidated operating EBITDA of ₹3,079 crore for July-September 2026, up 107% on a quarter that carried a ₹1,297 crore provision for SEBI settlement fees, the company says. Take that provision out of the year-ago base and the same measure grew about 10.7% (our arithmetic), in line with revenue from operations at +10.6% (our arithmetic). The margin did not widen: about 75.7% against 75.6% (our arithmetic). In our reading, the 76% is a level the exchange holds, not a level it just reached. The company's investor presentation puts its H1 FY27 share at 93% in cash and about 100% in equity futures; our reading is that this is why the level exists, and the quarter's filings cannot say more than that.

The idea in one sentence

Our reading: an exchange's margin is the price of its liquidity: when most of the orders in a market already meet on one venue, adding a trade costs the venue very little, and the margin follows from the share, not from a good quarter.

The fact that breaks the assumption

The headline reads as an operating leap: "operating EBITDA for Q2FY27 increased by 107% YoY to ₹ 3,079 crore with EBITDA margin at 76%" ([B]). Alongside it, total income grew 9% and profit after tax 23%. A 107% rise on a 9% rise in total income looks like extraordinary operating leverage.

It is not. The same press release says: "During the corresponding quarter of previous fiscal year, NSE had recognised a provision of ₹ 1,297 crore, towards the SEBI settlement fees related to colocation and dark fibre matters." ([B]). Total expenditure fell 51% to ₹1,161 crore from ₹2,354 crore ([B]; statement in [A]). The year-ago operating EBITDA was therefore depressed, and the 107% is mostly the base. The profit line has the opposite distortion: the year-ago profit before tax included a ₹1,200.94 crore exceptional gain on sale of an investment in an associate ([A]), so the 22.8% rise in profit after tax (our arithmetic: ₹2,577.62 crore against ₹2,098.47 crore) is held down by the same base effect running the other way.

One concrete thing, followed: the year-ago quarter, line by line

Revenue from operations was ₹4,066.80 crore against ₹3,676.80 crore, up 10.6% (our arithmetic); the company's headline 9% is on total income, ₹4,554 crore against ₹4,160 crore, which includes other income ([A], [B]). Expenses other than depreciation were ₹987.47 crore against ₹2,192.36 crore (our arithmetic). Remove the ₹1,297 crore and the year-ago figure is ₹895.36 crore, so the cost base grew 10.3% (our arithmetic), with revenue growing 10.6%.

That assumes the provision sits inside the year-ago expenses used for operating EBITDA. The press release places it in total expenditure, and our rebuild reproduces the company's +107%, which it would not if the provision were elsewhere. The statement's notes 2 and 3, to which "Other expenses" refers, are images and we could not read them.

On that basis, year-ago operating EBITDA ex-provision was about ₹2,781 crore (our arithmetic), a margin of 75.6% on revenue from operations, against 75.7% now (our arithmetic). The reported year-ago margin was 40.4% (our arithmetic), which is the only reason the margin looks as if it had jumped. The company does not present an ex-provision figure; this is our adjustment.

The mechanism: why share becomes margin

The company's own slide is titled "NSE's Self-Reinforcing Flywheels have Strong Network Effects" ([C]); the content of the slide is an image, so we cannot report what it says. The logic of the claim is general, and the filings give the numbers it should produce.

• Share. The presentation gives India market share for H1 FY27 of 93% in the cash market, "~100%" in equity futures and 68% in equity options ([C]). It does not define the measure.
• Volume. In the quarter, cash-market average daily traded volume was ₹1,18,377 crore, up 24%; equity-options premium ADTV was ₹47,977 crore, up 3%; equity-futures ADTV was ₹1,24,574 crore ([B]; no growth rate is given for futures).
• Revenue. Transaction charges were ₹3,035 crore against ₹2,789 crore, up 9% ([B]; 8.8% by our arithmetic), which the company says was "driven by higher volumes in cash markets and equity options segments". They are 74.6% of revenue from operations (our arithmetic). Other lines: data connectivity ₹267 crore, operating investment income ₹237 crore (up 9%), data feed and terminal services ₹165 crore (up 43%), and listing services ₹150 crore (up 70%) ([B]).
• Cost. Employee expense was ₹220.12 crore, SEBI regulatory fees ₹171.25 crore and other expenses ₹596.10 crore ([A]); together, with other expenses included, about 24.3% of revenue from operations (our arithmetic: 987.47 over 4,066.80), before depreciation of ₹173.88 crore.

Our reading: a liquid order book is the product, and the more of the market's orders already sit in it, the less a participant gains by going elsewhere. The cost lines above are small relative to the fees the book earns, so a venue with this share keeps most of each incremental rupee of revenue. The filings do not state the marginal cost of a trade; the reading rests on the cost ratio above, and on the fact that costs grew about as fast as revenue (10.3% against 10.6%, our arithmetic) rather than much more slowly, so the quarter shows a high and steady margin, not a rising one.

The standalone entity is a notch lower: operating EBITDA ₹2,622 crore at a 74% margin ([B]). For H1, consolidated operating EBITDA was ₹6,674 crore (up 45%, margin 77%), and consolidated profit ₹5,698 crore (up 13%) ([B]).

Against our earlier work on Marico (Marico, Q2 gross margin, volume and ad spend), where a falling input cost made it hard to separate a position from a cycle, an exchange has no commodity to separate. The question here is a different one: in our reading the margin is a function of share and volume, and both can be changed by the regulator's rulings and the market's trading activity.

WHERE THIS BREAKS: the bear case

• The regulator is part of the business, and the year-ago provision shows what that costs. The ₹1,297 crore the company recognised for SEBI settlement fees on colocation and dark fibre matters was about 35% of year-ago revenue from operations (our arithmetic). The presentation's own slide titles describe an exchange that is a "First-Level Regulator With Market Supervisor Role" and a "Designated National Critical Information Infrastructure ('CII') entity" ([C]; the slide bodies are images). SEBI regulatory fees are an ongoing cost line, ₹171.25 crore in the quarter against ₹194.85 crore a year earlier ([A]); the filings give no reason for the decline. The filings read do not say whether the settlement matters are fully closed or whether any further provision could follow.
• Revenue is tied to volume, and volume is not the same in every segment. Cash ADTV rose 24%, options premium ADTV 3%, and transaction charges 9% ([B]). The company does not split the charges by segment, so we cannot say whether the fee per rupee traded moved. The weakest share in the presentation is equity options, at 68% ([C]), which implies 32% of the segment is outside NSE (our arithmetic), though the measure is not defined; the filings do not name the other venues or say how that share has moved.
• Profit was lower than the June quarter. Revenue from operations fell from ₹4,560.41 crore to ₹4,066.80 crore (down 10.8%, our arithmetic), other income from ₹691.76 crore to ₹487.66 crore, profit before tax from ₹4,169.48 crore to ₹3,424.52 crore, and profit after tax from ₹3,120.08 crore to ₹2,577.62 crore (down 17.4%, our arithmetic) ([A]). The same rebuild gives a Q1 operating EBITDA margin of about 77.9% (our arithmetic), against 75.7% now. The company gives no reason for the sequential drop. The press release compares only with the year-ago quarter.
• Part of the profit growth is a lower tax charge. Total tax was ₹848.63 crore on profit before tax of ₹3,424.52 crore, 24.8%; a year earlier it was ₹942.38 crore on ₹3,038.00 crore, 31.0% (our arithmetic) ([A]). The filings give no reason for the difference.
• The share may be the ceiling. From 93% in cash and about 100% in futures, share cannot add much; growth has to come from volume, from options (68%), and from newer lines. The press release lists approvals for derivatives on the Nifty India FPI 150 Index and Corporate Bond Index Futures and says NSE facilitated India's first tokenised bond issuances aggregating ₹1,000 crore ([B]); it gives no revenue for any of them.
• No source here discusses competition or fees. [A], [B] and [C] do not mention a rival venue or a fee cut as a risk. The absence is not evidence that none exists; it means this note cannot test it.
• The strongest case against our reading. The company's own message is that the position is structural: market share, a clearing arm, a core settlement guarantee fund of ₹13,665 crore and an AAA credit rating ([C]; the rating line is a slide label, the agency is not named in the text). The margin held at about 76% on our adjusted figures, though the June quarter's was about 77.9% (our arithmetic). The limit is the sample: one quarter, one base effect, and no segment data. The December quarter is what would tell us whether 75.7% or the June quarter's level is the run rate.
• Audit scope. The consolidated auditor's report is not modified. The statutory auditor, Walker Chandiok & Co LLP, did not audit the interim financial statements of two subsidiaries and the interim consolidated statements of two others (total assets ₹45,169.67 crore as at 30 Sep 2026), relying on other auditors' reports, and says "Our opinion is not modified in respect of the above matter" ([A]).

A side fact: National Coal Exchange

The same board meeting approved "the divestment of up to 40% stake in National Coal Exchange of India Limited, currently a wholly-owned subsidiary of the Company, in one or more tranches, through secondary sale of equity shares" ([A]). Terms, buyer and price are not disclosed; the company says further disclosures will be made as required when the terms are finalised. We do not read anything into it for the moat.

Why it costs the reader something

A reader who sees "EBITDA up 107%" and takes it as a new rate of operating improvement is paying for a base effect: the underlying figure is about +10.7% (our arithmetic), which is a good business growing at the speed of its revenue. A reader who sees "profit up 23%" and "93% share" and stops there misses two quieter facts: the profit was lower than the June quarter, and the margin is a high, flat level that, in our reading, depends on a regulator's rulings and on trading volume, neither of which the company controls. The company also counts a large tax and fee flow through its markets as its "contribution to the exchequer", ₹41,234 crore in H1, of which securities and commodities transaction tax was ₹34,788 crore ([B]). That is about 4.2 times the H1 consolidated total income of ₹9,806.63 crore (our arithmetic). The tax is paid by market participants, not by NSE; our reading is that it shows how much of the market's cost to a trader is set by policy.

The concrete thing, again

Return to the year-ago line: ₹1,297 crore of provision, inside a quarter of ₹3,677 crore of revenue from operations. Strip it out and the exchange earned about 75.6% then and 75.7% now (our arithmetic): the same margin at 10% more revenue. The 107% headline is a base. The 93% cash share is a fact about the structure of the market and, in our reading, the source of the level. Whether that level survives is a question about volumes and the regulator, and this quarter's three documents answer neither.

MoatSCORE: 7.69 (GREEN, first-pass), read live from the Moat Screener on 4 Nov 2026

What to watch

1. December-quarter operating EBITDA margin against about 75.7% (our arithmetic), and whether revenue from operations recovers to the June quarter's ₹4,560 crore.
2. Whether the company splits transaction charges by segment and shows the fee per rupee traded.
3. Any new provision or SEBI order in the regulatory lines, and the SEBI regulatory fee against ₹171.25 crore.
4. The National Coal Exchange transaction terms, when disclosed.
5. Our daily read of the same filings: Daily Filing Digest, 3 Nov 2026.

Sources

• [A] NSE, board outcome, audited results for the quarter and half year ended 30 Sep 2026, auditor's report and National Coal Exchange approval (BSE-only filing, read from the local text)
• [B] NSE, press release on Q2 and H1 FY27 results (BSE-only filing, read from the local text)
• [C] NSE, investor presentation Q2 | H1 FY2027 (BSE-only filing, read from the local text)
• Earlier Moat & Margin piece: Marico, Q2 gross margin, volume and ad spend
• Same day's filings: Daily Filing Digest, 3 Nov 2026

Educational research, not investment advice. Every figure above is drawn from National Stock Exchange of India's own filings of 3 November 2026, read from the primary documents on 4 November 2026; derived figures are our arithmetic, labelled as such. MoatSCORE: 7.69 (GREEN, first-pass), read live from the Moat Screener on 4 Nov 2026. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.