NSE IPO Soon: Why Does Zerodha's Nithin Kamath See NSE As Cash Machine? Everything About Biggest IPO In India

Zerodha's Nithin Kamath believes the National Stock Exchange (NSE) is a cash and distribution machine. According to him, NSE who recorded a dividend payout of 84% in FY26, will likely continue on delivering dividend rewards even after listing. The NSE IPO size is estimated to be around Rs 30,000 crore, making it the biggest IPO in India as of now. NSE listing has been much awaited but was delayed for almost a decade due to regulatory issues. Hence, the upcoming listing is pivotal for both NSE and investors.

NSE Cash Making Machine?

On X, Kamath said, "NSE is a cash generation and distribution machine."

He referred NSE's FY26 performance, where the exchange reported Rs 10,300 crore net profit and delivered up to Rs 8,660 crore of dividends. This makes a dividend payout ratio of 84% for NSE in FY26.

"This will likely continue even after listing because NSE can't do much with the excess profits. SEBI doesn't allow exchanges to invest in other businesses, listed or private"

While referring to NSE's dividends distribution, Kamath also questioned, "So why aren't there more businesses like this?"

It comes down to tax arbitrage.

According to Kamath, assume a business earns Rs 100. It pays ~25% corporate tax, leaving Rs 75. If that Rs 75 is distributed as dividends, the shareholder pays tax again at their marginal rate. Can be another ~36% for someone in the highest bracket. The investor ends up with ₹48 out of the original Rs 100.

Explaining further, he said, now contrast that with a company that reinvests the entire ₹100 into growth. If that growth reflects in the stock price, the investor pays capital gains tax only when they sell and at a much lower rate of 14.5% (the highest rate). Adding to this, there is no tax on this ₹100 because nothing is booked as profit.

Also, a differential of 14.5 % vs 51% creates a strong incentive for profitable companies to reinvest aggressively rather than distribute. He said, "Which is why you don't see many new-age businesses choosing to be profitable in the first place."

Kamath added, "I hope something changes here. Reinvestment is good for the economy in the short run, but businesses that aren't profitable are also far more vulnerable. One bad cycle can kneecap them severely. In the long run, that isn't smart."

Adding lastly, Kamath said, "This is part of a much larger global debate: the double taxation of corporate profits. Many countries have tried to address it. The US taxes dividends from most listed companies at lower rates than regular income through "qualified dividends." Australia gives investors credit for tax already paid by the company on its profits."

Everything About NSE IPO:

NSE IPO Size:

The largest stock exchange of India has filed for an IPO worth Rs 30,000 crore at SEBI. If fully subscribed, this will make NSE the biggest IPO in history of Indian market.

NSE IPO Offer For Sale:

NSE IPO is entirely offer for sale (OFS). Hence, only existing stakeholders will offload a portion of their stakes in NSE for purchase in open market via IPO. This also means that the process of the IPO will directly go to stakeholders and not the exchange.

Under OFS, NSE shareholders will offer 14.89 crore equity shares. These shareholders are --- State Bank of India, MS Strategic (Mauritius), Aranda Investments (Mauritius) Pte Ltd, Canada Pension Plan Investment Board, Stock Holding Corporation of India, General Insurance Corporation of India, Bank of Baroda, The New India Assurance Company, United India Insurance Company and National Insurance Company.

NSE IPO Price Band, Dates

The price band including opening and closing dates of the IPO is yet to be announced.

NSE IPO Book Running Lead Managers:

The book running lead managers for NSE IPO includes companies like Kotak Mahindra Capital Company, HSBC Securities and Capital Markets, Morgan Stanley India Company, SBI Capital Markets, DAM Capital Advisors, HDFC Bank, IDBI Capital Markets & Securities, Avendus Capital, Motilal Oswal Investment Advisors, JM Financial, Citigroup Global Markets India, JP Morgan India, Pantomath Capital Advisors, Anand Rathi Advisors, Equirus Capital, ICICI Securities, IIFL Capital Services, Nuvama Wealth Management, Axis Capital and 360 ONE WAM.

How Does NSE Make Money?

As per Zerodha's explainer, NSE's revenues is arising from transaction charges, listing services, data centre charges, data connectivity charges, licensing, clearing & settlement services among others. In FY26, the exchange posted Rs 16,600 crore revenue from operations. Of the total, 79% came from transaction charges alone. From, NSE generated Rs 1,500 crore revenue in equity transaction charges and Rs 1,500 crore in equity futures.

However, the biggest contributor to its revenue is equity options, under which, NSE generated up to Rs 10,000 crore -- making it 60% of its total revenue. Zerodha's note said, "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 rest of 21% is generated via 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 Rs 1,100 crore into its coffers. NSE also earned Rs 350 crore from listing services last fiscal.