The company behind every trade in India is going public

Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, we’ll tell you why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.

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In today’s edition of The Daily Brief:

1. India’s biggest every IPO
2. The Strait reopens, but India’s farms have little time

Today, we are going to talk about a company that is critical to our business at Zerodha, and to every other broker in India. It is because of them that we exist, as does the ecosystem we’re part of.

This is the National Stock Exchange, NSE. They filed their IPO papers this week, and from the size it is expected to reach — at nearly ₹30,000 crore — it may well become the biggest IPO India has ever seen. They’re going for a pure offer for sale, that is, NSE itself is not raising any money. Its existing shareholders are cashing out. Their offer document is a gold mine. Even to us, as people who sit in the middle of Indian financial markets every single day, there were things we hadn’t fully thought about before.

When you buy a stock on Zerodha, you also pick an exchange to route your order to: NSE or BSE.

Several entities come together to make your trade successful: the exchange, a clearing corporation, a depository. But the exchange lies at the heart of it. It is the venue where the actual trade happens. Here, your buy order is matched with a sell order, and the transaction is executed.

Zerodha charges you a brokerage to get your trade to NSE. In turn, NSE charges Zerodha a fee for routing trades through its platform.

A few years ago, Indian capital markets barely registered in global financial conversations. Most Indian households kept their savings in fixed deposits and gold, and the stock market was something most people had no real relationship with. Over the last decade or so, however, that changed rapidly, and dramatically.

India is now the fourth-largest equity market in the world by market capitalisation. As of March 2026, nearly 13 crore Indians are registered as investors on NSE. Just two years ago, that number was just over 9 crore. That is, India added about 4 crore new investors in just two years. In FY26, 108 companies listed on NSE’s main board, the highest number in several years.

More than ₹20 lakh crore was mobilised through its platform in a single year, across equities, debt, mutual funds, and infrastructure instruments.

NSE, at the centre of all this, earns from every piece of activity flowing through.

In FY26, NSE revenues from its operations came to about ₹16,600 crore. About ₹13,000 crore of that, or roughly 79%, came from the transaction charges NSE collects every time a trade foes through its platform. Of that, cash equities generated about ₹1,500 crore, while equity futures generated about ₹1,500 crore

The mega-earner, however, were equity options, which singularly generated ₹10,000 crore — or 60% of NSE’s total revenue.

Much of that was the result of a single instrument: the Nifty 50 weekly options contract. From almost nothing a decade ago, it has now become the beating heart of the largest financial market institution in India.

The remainder — 21% of NSE’s revenue — comes from four places. One, there are data connectivity charges, which trading firms and institutions pay for a direct, fast connection to NSE’s matching engine. Large firms co-locate their servers inside NSE’s data centre so their orders arrive microseconds ahead of everyone else. The fees for that service can be significant: bringing about ₹1,100 crore into its coffers.

Then, there are data feed and terminal services. Everyone from Bloomberg, to trading platforms, to analytics providers all pay NSE to access real-time prices. This makes up another ₹470 crore.

It also made about ₹350 crore from listing services: the annual fee from listed companies, plus IPO processing fees.

And finally, there’s index licensing — when fund managers pay to use the Nifty name in their products — earning it about ₹150 crore.

If anything, this market is under-developed. There is ₹8 lakh crore sitting in passive funds in India, tracking Nifty indices. NSE earns only ₹150 crore from licensing all of it.

Compare it to global exchanges. While Indian exchanges earn the overwhelming majority of their revenue from transaction charges, global exchanges operate very differently.

Nasdaq, for instance, has built a large data and technology business. A significant portion of its revenue now comes from data subscriptions, analytics, and index licensing — all of which is agnostic to how active markets are on any given day.

Similarly, the London Stock Exchange acquired Refinitiv in 2021, one of the world’s largest financial data businesses. With this, the majority of its revenue, too, has nothing to do with daily trading volumes. These businesses have made themselves resilient to the ups and downs of market activity, by monetising data and indices that people subscribe to.

In contrast, NSE’s revenue is almost entirely a direct function of trading activity. And so, whenever the rules that govern trading change, NSE’s income changes too. That happened in October 2024, when SEBI issued a circular restructuring equity derivatives. From different expiries almost every day, it cut things down to one weekly expiry per exchange. It also tripled lot sizes, and introduced new margin requirements on expiry-day options. These measures reduced retail speculation, as intended. Derivatives volumes fell sharply, and NSE’s revenue fell with them.

Revenue from operations went from about ₹17,100 crore in FY25 to ₹16,600 crore in FY26. Profit fell from about ₹12,200 crore to about ₹10,000 crore. All this volatility was a simple matter of how linked the NSE was to trading volumes.

SEBI regulates every financial intermediary in India: brokers, fund managers, depositories, and exchanges. But NSE’s exposure is different. SEBI’s rules do not just affect NSE’s costs or compliance processes. Everything SEBI does ultimately shows up in the activity that is happening on the exchange. Because so much of NSE’s revenue comes from derivatives, a product whose existence is entirely defined by SEBI’s rules, any change SEBI makes flows directly into NSE’s top line. NSE can’t change this dependence even if it wanted to.

For the ₹16,600 crore NSE earned in revenue last year, it also spent about ₹6,000 crore. That left it a profit of about ₹10,000 crore — a margin of roughly 51%. There’s a lot this cost structure tells you about this business.

So, where does NSE spend its money?

The amount it spends on employees isn’t too high: its just ₹790 crore. For a company with ₹16,600 crore in revenue, that is exceptionally lean. Most large financial services businesses spend a third or more of their revenue on people. NSE spends under 5%. This just isn’t a people business. NSE’s product is a matching engine: software that processes millions of orders per second.

The assets that matter to it are servers, cables, and code, and its technology spending reflects this. NSE spent about ₹1,300 crore on technology operations in FY26 — a big jump from the ₹790 crore it spent just two years earlier. It made another ₹420 crore of capital investments into technology. Together about ₹1,700 crore went into technology in FY26 — almost three-fourths of NSE’s entire capital expenditure.

An even larger share of NSE’s spending goes to SEBI. It pays the regulator a regular fee based on trading turnover, which came to about ₹800 crore in FY26. The larger expense, however, was its settlement fees, which gets a separate line in its statements. These are effectively regulatory fines.

In FY26, it paid SEBI ₹1,400 crore in settlement fees, primarily because of the TAP matter: a regulatory case it recently settled, involving how certain participants had privileged access to its systems. It had also paid about ₹640 crore to SEBI in September 2024. Across the last three years, NSE has paid roughly ₹2,200 crore in such settlements.

To put that in perspective: in FY26 alone, it paid ₹8,660 crore in dividends.

When a company makes a profit, it generally has two choices: reinvest it back into the business to grow, or pay it out to shareholders as a dividend. Most companies prefer to reinvest where they can, because that is how they build more value over time. NSE does not really have that option. SEBI controls what products it can launch, what it can acquire, and how far it can expand. So most of the money that comes in goes straight back out.

In FY26, NSE earned about ₹10,300 crore and paid out ₹8,660 crore of that as dividends, a payout ratio of 84%, and nearly double what it paid the year before. Even after paying out that much, NSE still had ₹64,771 crore sitting in investments on its balance sheet as of March 2026.

There’s one part of NSE that almost nobody knows about: its subsidiary, NSE Clearing Limited, or NCL.

When a trade executes on NSE, matching orders is only part of the process. But the trade also has to settle. The shares have to move to the buyer’s demat account. Money has to reach the seller.

NCL handles this process. It inserts itself between every buyer and seller on NSE, and guarantees that settlement will happen even if one side defaults. It clears about 88% of all cash market trades in India and about 91% of equity derivatives. It is the silent guardian ensuring the sanctity of every trade on the NSE. If a broker fails between the time you buy a stock and the settlement date, NCL steps in and ensures your shares arrive. To back this guarantee, NCL holds a settlement fund of about ₹13,000 crore.

We also wanted to look at the cashflow numbers, because they tell a very interesting story.

NSE’s operating cashflow was about ₹30,000 crore in FY24. Then, it dropped to about ₹4,000 crore in FY25, before surging to about ₹24,000 crore in FY26. Why this intense volatility?

One reason is the settlement obligations and margin money held from trading members. When markets are active and positions are large, more cash from brokers sits with NSE at year-end as collateral. In FY26, this pool grew by about ₹14,500 crore, compared to FY25, inflating operating cashflow. In FY25 it shrank by about ₹5,500 crore, suppressing it.

To be clear, this is not money NSE has earned. It belongs to the brokers. It will be returned. But in between, the exchange sits on a mountain of cash.

NSE has as privileged a place as the financial markets can offer. It earns whether markets go up or down, and whether individual trades are profitable or not.

The only things that can actually interrupt this business are a significant fall in trading volumes or a change in the rules governing what can be traded. Both of those have already happened in the last two years. But in the scale of NSE’s business, even that was a mere blip. Unless India’s financial markets collapse altogether, few things can touch this giant.

Despite all the regulatory to-and-fro, India continues to add crores of new investors every year. Companies keep queuing up to list. The structural growth of Indian capital markets shows no signs of slowing.

If you’re an investor that had been paying NSE a fee on every trade you ever made, you can now switch to the other side, and own a piece of the exchange itself.

There is a serious problem ahead of this year’s kharif sowing season. We might not get enough fertilizer to our farms on time, primarily because the Strait of Hormuz was closed — a problem we’d explored before.

The sowing window is open, the soil is ready, and a farmer may need fertiliser bags that haven’t arrived yet. He calls the dealer, who says the shipment hasn’t come. The dealer calls the distributor, who’s waiting on the warehouse, which itself is waiting on a consignment that left a port days ago.

At the end of that chain, sixteen ships have been sitting loaded in or around the Strait of Hormuz, carrying 3.3 lakh metric tonnes of urea, 2.6 lakh tonnes of DAP, one ammonia cargo, and 1.1 lakh tonnes of sulphur, all of it headed for India but unable to move.

On 18 June, the US and Iran agreed on the Strait to reopen. Finally, ships might be able to move.

But for the farmer waiting at the end of that chain, that headline changes little, at least for now. The Strait may reopen in a day, but normal fertiliser availability takes months. On paper, even if we have enough national fertilizer stock, there is uncertainty on whether they’ll reach farmers on time this sowing season. That’s the story we’re covering today.

To begin with, what happens the day the Strait opens?

A joint industry advisory that includes BIMCO, the world’s largest shipping association, warned that hundreds of vessels clustered around the Strait could themselves become a navigational hazard once movement resumes. The reopening doesn’t clear the road so much as switch the traffic light from red to amber. Insurers who treated the route as a war zone are not going to reverse that assessment on the mere day of an announcement. Shipowners would want concrete proof over promises.

The disruption also runs deeper than just a traffic jam.

India’s Gulf imports include a large share of its urea and DAP needs, and close to half its LNG. But the Gulf also supplies the ingredients that India’s own fertiliser plants depend on. As per the Ministry of Chemicals and Fertilizers, India imports 75% of the ammonia used to make complex fertilisers, 86% of its rock phosphate, 52% of its sulphur, and 78% of the natural gas used to produce urea. The Strait’s closure affects both finished goods and raw materials.

Shipping industry executives say that a return to normal cargo flows would most likely take 3-4 months. Jakob Larsen, BIMCO’s head of safety said that despite the agreement, the security situation remained volatile and transits were still very risky. Even if insurance were available, there is, quite understandably, uncertainty on whether the ship’s crew and the company chartering the vessel are all prepared to commit to a voyage.

The first vessels may clear quickly, but supply chains do not operate on single shipments. Dealers, fertiliser companies and farmers all need confidence that flows have normalised before they can make decisions. The first couple of weeks will likely be spent on re-building this confidence in the supply chain.

Then, once that’s done, movement might be more visible as stranded cargo begins to arrive and ports see activity. But arrival at an Indian port is still not arrival at the farm.

Once the cargo arrives at an Indian port, it has to encounter various kinds of hurdles across the value chain. And each part of that chain recovers at different times.

The first type of hurdle is the fact that the routes for finished fertilizer goods and raw material used for fertilizer operate at different speeds.

In the first route, imported finished fertilizer reaches a port, enters storage, is allocated to states and districts, moves inland, reaches dealers, and gets to farmers. In the second, longer route, a raw material reaches a port, moves to a fertiliser plant, becomes finished fertiliser, and then follows the same sequence of activities as the first route.

While the first may begin delivering visible relief within two to three weeks of stranded cargo clearing, the second route naturally takes much longer. A plant cannot produce fertilizer it doesn’t yet have the raw materials to make.

A plant needs a regular stream of inputs to run smoothly. One delayed shipment of ammonia doesn’t restore a production schedule that has been disrupted for weeks. The plant has to figure out its raw material position, restart carefully to avoid equipment problems, and wait for the next delivery before it can feel confident about its output.

The World Bank noted that in the wake of the Strait’s closure, Qatar had suspended urea, ammonia and sulphur production after damage to key facilities, and that Iran had halted ammonia production entirely. Getting those plants back online is not a single event. It happens in stages, as feedstock becomes reliable again and maintenance checks are completed.

Even the first route involves more friction than it looks. See, India’s Department of Fertilizers manages allocation through a monthly supply plan prepared with manufacturers and importers. Imported cargo has to clear customs, get assigned to states, and then move by rail to district warehouses before it reaches dealers.

Different materials move differently

That’s not the only type of uneven recovery in this value chain, either. There are discrepancies within various raw materials themselves, as well as within fertilizers.

Take finished goods for instance. The World Bank projects urea prices to rise nearly 60% in 2026 before easing in 2027 as Middle East exports recover. DAP, meanwhile, faces a different pressure point. The Gulf handles a large share of global sulphur and ammonia shipments, both of which are critical inputs for DAP production. Since sulphur is a refinery by-product, its supply depends on how quickly Gulf refineries restart, and that recovery is expected to lag the oil market.

India may have just enough urea for this season, but DAP is the far more uncertain piece of this puzzle.

To make matters worse, within the raw materials required to make those finished goods, there are issues, too.

In May, Indian Potash Limited (IPL) floated a consolidated tender for 5.21 lakh tonnes of ammonia — a key raw material used to make urea — on behalf of six major domestic producers. Global suppliers could realistically only offer 2.39 lakh tonnes in response — less than half of what India needed.

Then after ammonia comes sulphur, a key ingredient in DAP. Unlike urea, where the government could buy spot natural gas (which is used to make ammonia) at nearly double the contract price, sulphur has no such immediate lever, let alone an expensive one. It’s a by-product of oil refining — you get more sulphur when Gulf refineries process more sour crude, and restarts of oil refineries generally lag the broader oil market by some months.

IPL floated a separate tender in May for nearly 6 lakh tonnes of sulphur on behalf of eight domestic companies. It had to cancel the tender entirely: offer prices came in at $1,170–1,295 a tonne, well above the global market benchmark of $1,000–1,100. Sellers knew they had leverage. For urea, India found partial or expensive workarounds, but couldn’t even buy the raw material for DAP

India entered the Kharif season with around 195.79 lakh metric tonnes of fertiliser stock against a seasonal requirement of 383.9 lakh tonnes, covering just over 51% of its needs before the first new cargo from the reopened Strait even arrived. A senior Fertilizers Ministry official said in June that, owing to this stockpile, there was no major challenge to availability for the current sowing season.

But no major challenge is not the same as not having any. The same official said that this stock of 51% is much higher than the historical average of 33%. You wouldn’t need to resort to a stockpile if the market is stable.

So far, the government states that farmers have purchased 27% of their seasonal requirement. There is still a chance that farmers don’t get ample fertilizer input right on time for the kharif season. A supply that arrives after the right application window won’t help the yield, regardless of what the national stock number shows.

The reopening of the Strait is the end of a geopolitical crisis, but the economic recovery will still take time. Farmers feel the full recovery last, and those who need phosphatic fertiliser for the rabi season may feel it latest of all.

This isn’t even the only large problem looming over this year’s kharif season. As we’ve covered earlier, a little boy roams the world’s waters, preparing to disrupt India’s monsoons. We’re already seeing the impacts of the Super El Niño — perhaps, that’s something we’ll explore deeper in a story soon.

[1] HDFC Bank extends Keki Mistry’s tenure The RBI has approved a three-month extension for Keki Mistry as interim part-time chairman of HDFC Bank, keeping him in the role until September 18 or until a permanent chairman is appointed. He was brought in as a stopgap after Atanu Chakraborty’s sudden exit in March, and the bank is still searching for a regular chairman. Source: Reuters

[2] BHP, Rio Tinto bet on India for steel’s next act With China’s property-led steel expansion fading, BHP and Rio Tinto are increasingly looking to India as the next major growth engine for global steelmaking. India has set a production target of 500 million tons by 2047 — triple last year’s 165 million tons — with rapid urbanization and government infrastructure spending expected to drive years of demand. Source: Business Standard

[3] Mumbai rations water as monsoon stays away Mumbai’s seven supply lakes are now at just 10.35% of capacity — leaving the city of 13 million with roughly 40 days’ worth of water — after Maharashtra received 75% less rainfall than average in the first 16 days of June. Authorities have cut water supply to all construction sites and reduced industrial and commercial usage by 20%, with the monsoon’s arrival now pushed to late June. Source: Reuters

– This edition of the newsletter was written by Krishna and Vignesh.

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Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.

So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.

India’s EV adoption is now less dependent on the vehicles, and more everything it plugs into — the charger, the connector, the software, the protocols that charging networks use to talk to one another, and, most importantly, the ageing Indian electricity grid beneath all of it.

To make sense of all this, we spoke to Zohra Khan, founder & CEO of IPEC, which designs and manufactures EV chargers for India’s leading two- and three-wheeler OEMs, to understand what it actually takes to build charging infrastructure at scale in India.

You can also listen to the full conversation on Spotify and Apple Podcasts. The full transcript of the podcast is below if you prefer to read.

Thank you for reading. Do share this with your friends and make them as smart as you are 😉

This post was first published on Substack.