NSE FY26 Results Explained: Why PAT Fell 15% and Is FY27 a Recovery Year?

India's biggest stock exchange just had a rough year on paper.

Profit down 15%. Revenue is down. Margins squeezed. If you only read the headline, you'd think something was seriously wrong at the National Stock Exchange.

But here's what's actually going on and why the full picture looks very different from the headline.

NSE reported its FY26 numbers, and yes, they look weak compared to last year. On a full-year consolidated basis, NSE's FY26 results looked like this:

Total Income: ₹18,713 crore down 2% YoY.

Revenue from Operations: ₹16,601 crore down 3% from ₹17,141 crore.

Operating EBITDA: ₹11,098 crore down 12% YoY.

Profit After Tax (PAT): ₹10,302 crore down 15% from ₹12,188 crore.

EPS: Fell from ₹49 to ₹42.

Return on Equity: Slipped from 45% to 33%.

Key Metrics Snapshot

Metrics	FY25 (in ₹ Cr)	FY26  (in ₹ Cr)
Total Income	19,141	18,713
Revenue from operations	17,141	16,601
Operating EBITDA	12,611	11,098
EBITDA Margin	74%	67%
PAT	12,188	10,302
EPS	₹49	₹42
Return on Equity	45%	33%

​

Four Things That Actually Drove the PAT Decline

NSE's profitability took a meaningful hit in FY26. But the question any good analyst asks is not just what happened, it is why it happened and whether those reasons will still exist tomorrow.

1.   The SEBI F&O Circular Hit NSE Harder Than Anyone Else

In October 2024, SEBI tightened India's futures and options market. Fewer weekly expiries. Bigger lot sizes. Higher contract values. The idea was to protect retail investors from excessive speculation.

Good intention. But for NSE, the timing hurt badly.

Why? Because equity options alone make up about 77% of NSE's transaction revenue. When that one segment gets squeezed, there's no quick way to compensate. Trading volumes fell. Transaction charges fell with them.

And here's the twist: the same rule that hurt NSE actually helped BSE. SEBI allowed only one weekly expiry per exchange. NSE lost most of its expiry days. BSE grabbed Friday and captured a massive chunk of the displaced traders overnight. The very same regulation, two completely opposite outcomes.

2.  The SEBI Settlement  ₹1,432 Crore Out the Door

NSE's co-location controversy had been hanging like a dark cloud over the exchange's IPO ambitions for nearly a decade. In FY26, NSE chose to clean the slate decisively paying ₹1,432 crore in SEBI settlement fees to resolve the co-location and dark fibre cases. This was a one-time cost. It will not repeat in FY27. It will not repeat ever again.

One-time charges get absorbed into the P&L of the year they are taken, and they drag down PAT in ways that mislead casual readers into thinking the underlying business deteriorated. It did not. Strip this out, and the picture changes substantially.

3. New Labour Codes

The implementation of India's new Labour Codes resulted in an additional hit of approximately ₹126 crore in FY26. Again, a one-time accounting adjustment, not a recurring cost.

4.  Last Year Was Unusually Good

FY25 PAT was inflated by one-time gains from selling investments things like stakes in subsidiaries and associates worth nearly ₹2,000 crore. So when you compare FY26 to FY25, you're comparing a clean year to an exceptionally boosted one.

Strip out all the one-time items from both years, and the real underlying profit decline was closer to 5% not 15%.

That's a meaningful difference.

You are comparing apples to exceptional oranges.

The normalized picture: Strip out the SEBI settlement fees and other one-off items from FY26, and the consolidated profit before tax fell only 5%. The reported 15% PAT decline is accurate, but it significantly and substantially overstates the underlying business deterioration.

The Quarter That Changes the Conversation: Q4 FY26

If the full-year headline worried you, Q4 should settle your nerves.

The final quarter of FY26 told a completely different story:

Revenue from operations: Up 32% year-on-year

Revenue from operations: Up 27% quarter-on-quarter to ₹4,968 crore

Operating EBITDA: Up 30% YoY, holding firm at 73% margin

PAT: Up 8% YoY, up 19% quarter-on-quarter to ₹2,409 crore

Options premium average daily volumes: Surged 43% QoQ to ₹76,375 crore per day

Equity cash market ADTV: Up 21% QoQ to ₹1.20 lakh crore

Equity futures ADTV: Up 17% QoQ to ₹1.78 lakh crore

The business recovered sharply in its final quarter. The full-year drag came almost entirely from the first three quarters, specifically Q2, where the SEBI settlement charge landed. The normalised Q4 profit before tax grew 22% year-on-year and 20% quarter-on-quarter. That is the clearest signal available that the worst is firmly in the rearview mirror.

The business bounced back sharply in its final quarter. The worst of the regulatory shock had passed, volumes recovered, and the margins came right back. That Q4 run rate ₹2,409 crore in a single quarter is what FY27 starts from.

NSE's board also announced a final dividend of ₹35 per share, the same as last year. In a year the company took a regulatory gut punch and cleaned up its books, maintaining the dividend sends an unambiguous message of confidence from the top.

What NSE Built While Everyone Was Watching the Losses

Here is the part of the NSE FY26 story that almost nobody is talking about and arguably the most important part.

While equity derivatives revenues were under regulatory pressure, NSE was quietly building new revenue engines that did not exist even two years ago.

Commodity Derivatives: Average daily turnover grew nearly 10x in FY26 to ₹91 crore per day. Starting from close to nothing, that is genuine diversification happening in real time.

Electricity Futures: Launched in July 2025, the electricity futures segment already generated ₹11,098 crore in annual turnover with a 72% market share within its first year of existence. NSE also tied up with S&P Global Energy for crude oil derivatives on Platts benchmarks and with IGX for natural gas, creating India's first domestically benchmarked energy derivatives contract.

Mutual Fund Platform: This is the most underappreciated story in the entire FY26 results. Orders on NSE's mutual fund platform grew 91% year-on-year to 12.1 crore orders in FY26. Revenue from the segment grew 38%. As India's SIP culture deepens and passive investing grows from its current roughly 15% share of equity AUM, NSE's MF platform sits directly in the path of a multi-decade structural tailwind.

IPO Facilitation: FY26 was a record year for Indian primary markets. NSE facilitated ₹1.8 lakh crore in IPO fund mobilization, ranked 2nd globally by number of IPO listings, commanding a 15.3% global market share. 219 new companies listed in FY26. Total funds mobilized across debt and equity reached ₹20.3 lakh crore.

The exchange of the future one that earns from commodities, electricity, natural gas, mutual funds, bonds, and international indices is being built right now, inside a year that the headlines will call bad.

The exchange is diversifying. Quietly, steadily, but meaningfully.

The NSE vs BSE Divergence

While NSE struggled, BSE had one of its best years ever. Revenue surged. PAT grew an estimated 65% in FY26. The stock has been a market darling and a portfolio hero for those who held it.

How does the exact same regulatory change that hurt NSE benefit BSE? The mechanics matter here.

Before October 2024, BSE had essentially no meaningful F&O volumes. NSE owned the entire derivatives week. SEBI's one-expiry-per-exchange rule forced NSE to vacate most of its expiry calendar in one move. BSE stepped into the vacuum on Friday, a day NSE did not claim, and captured a massive pool of displaced retail derivatives traders overnight. BSE's equity options volumes went from negligible to meaningful within months.

But here is the critical nuance: this is a redistribution of existing retail F&O activity, not genuine new market creation. BSE benefitted from regulatory arbitrage, not fundamental business building. NSE's dominant franchise in equity cash markets, equity futures, debt, currency, and international index derivatives was not meaningfully impacted. The exchange's overall market share in equity cash remained above 92% and maintained near-monopoly status in equity futures through the full year.

The market will continue to narratively reward BSE's momentum story. But for anyone thinking about the next three to five years as India's capital markets deepen, as institutional money grows, as foreign investors anchor their India exposure to Nifty NSE's structural position is categorically different from any competitor.

So Is FY27 a Recovery Year?

Let's be direct: yes, FY27 is set up to be a recovery year, but recovery here means different things depending on what you are measuring.

On PAT: The one-time drags are gone. The SEBI settlement of ₹1,432 crore does not recur. The labour code adjustment does not recur. The FY25 base effect no longer inflates the comparison. Centrum Broking projects NSE's total income to grow at a 10% CAGR between FY25 and FY28. Net profit is expected to expand at a 9% CAGR to reach ₹1.51 lakh crore by FY28. Return on equity, which fell to 33% in FY26, is projected to recover to 31–38% range through FY26–FY28.

On Operating Momentum: Q4 FY26's 73% EBITDA margin with strong sequential volume recovery is the baseline from which FY27 begins. If that momentum sustains, PAT growth returning to the 15–20% range in FY27 is not an aggressive forecast, it is a reasonable base case.

On New Segments: The commodity, electricity, and natural gas derivatives businesses will have full-year contributions in FY27 for the first time. The mutual fund platform's 91% volume growth needs to be annualized and monetized further. These incremental revenue streams are small today but growing at exceptional rates.

On the IPO Catalyst: This is the big one. SEBI issued its NOC on January 30, 2026. NSE's board approved the IPO plan on February 6, 2026. The exchange is expected to file its DRHP by June 2026, with a potential listing before December 2026 raising over ₹21,000–25,000 crore through an Offer for Sale. When NSE lists as India's largest, most profitable exchange with ₹10,000 crore in annual profit, it will attract foreign institutional investors, index inclusion, and the kind of re-rating that listed exchange stocks globally have historically commanded. The IPO is not just a liquidity event, it is a valuation reset.

The Honest Risk: Any further SEBI action on F&O tighter position limits, STT revision, additional expiry restrictions would be damaging. The regulator has signalled retail F&O protection as a priority, and no one should pretend that risk does not exist. Additionally, BSE will not surrender its Friday expiry advantage without a fight. NSE's share of equity options revenue, which slipped to 75.6% in some quarters, faces real competition for the first time in its history.

Conclusion:  The Long View

There is a tendency in financial media to judge an institution like NSE by its quarterly P&L and miss the thing that actually matters.

NSE is not just a stock exchange. It is the backbone of Indian capital formation. Every SIP, every IPO, every derivatives hedge, every debt placement in India runs through NSE infrastructure in some form. It has 25.7 crore registered investor accounts. It operates the world's most actively traded equity derivatives market by number of contracts. It runs the Nifty 50, the index that every foreign investor in India tracks, trades, and references. It has zero debt. Its EBITDA margins, even in a bad year, stayed at 67–73%. It generates between ₹2,000 and ₹2,800 crore of net profit every single quarter with almost no incremental capital requirement.

That is an extraordinary business. The FY26 results do not change that characterization in any meaningful way.

What FY26 actually was when you strip away the noise is a cleanup year. NSE cleared its regulatory history, absorbed extraordinary one-time costs, watched a competitor eat some of its derivatives lunch, and still delivered ₹10,302 crore in profit. The Q4 recovery confirms the underlying engine is intact. The new business lines confirm the next growth chapter is underway. And the IPO machinery is finally moving after a decade of false starts.

For investors and observers of India's capital markets: FY26 was the trough. FY27 is where the story gets interesting again.