Episode 01  ·  05 Aug 2026  ·  NSE

When Strong Financials Were Not Enough

A series on what a business's numbers don't say — and why it matters.

Mahesh Ramanujam, FCA, DISA(ICAI) · R. Mahesh & Associates, Chennai · National Stock Exchange · IPO Journey · 2016–2026
This Episode — The Snapshot
CompanyNational Stock Exchange of India Ltd. (NSE)
What the numbers showA dominant, highly profitable exchange business — strong and growing revenue, high profitability, consistent cash generation
What the numbers didn't showA governance framework under scrutiny since 2015–16, and the co-location controversy over preferential system access for certain trading members
ConsequenceAn IPO first attempted in December 2016 remained unresolved for almost a decade while the business kept growing
Where it standsSEBI's July 2026 in-principle acceptance of a ₹1,491 crore settlement cleared the way for a fresh DRHP filed in June 2026
ThemeGovernance, controls and regulatory standing as inputs to value — not footnotes to it
Why This Episode

NSE's business strength was never the question. What took nearly a decade to resolve was everything the income statement doesn't capture — governance, internal controls, and regulatory standing. Good financials are necessary. On their own, they are not sufficient.

The Hook

The National Stock Exchange is one of India's most important financial institutions. Its business strength is hardly in question — NSE has built a dominant position in several segments of India's capital markets and developed a highly profitable exchange business.

Yet its journey towards becoming a listed company offers an important lesson for anyone trying to understand or value a business.

Good financials do not tell the whole story.

The Ledger Split

What the numbers told us

  • Revenue — strong and growing
  • Profitability — high and improving
  • Cash generation — consistent
  • Business growth — steady, year on year

What the numbers couldn't tell us

  • Governance framework — under scrutiny since 2015–16
  • Internal controls — questioned via the co-location case
  • Regulatory standing — unresolved for a decade
  • Market dominance — raised the stakes on governance
Margin Note

The numbers weren't wrong. They were incomplete for the decision an investor had to make.

The Narrative

NSE first filed its Draft Red Herring Prospectus with SEBI in December 2016.

Around the same period, the co-location controversy surfaced — allegations that certain trading members had obtained preferential, faster access to NSE's systems through its co-location facility. For an exchange whose entire value proposition rests on offering a fair and equally accessible market, this was not a routine operational lapse. It went to the core of what the institution was supposed to guarantee.

The IPO stalled. Regulatory proceedings, governance reviews and leadership changes followed, stretching across years — while the underlying business kept growing.

~10 yrs Between NSE's first DRHP filing and a resolved path back to the public markets

In June 2026, NSE filed a fresh DRHP. In July 2026, SEBI gave in-principle acceptance to a revised ₹1,491 crore settlement covering the long-pending co-location and dark fibre matters, following a board-approved payment — clearing the most significant overhang on the listing.

Nearly ten years after the first attempt, NSE is moving towards the public markets again.

The Lesson

The real consequence was time.

An IPO journey that began in 2016 remained unresolved for almost a decade, even as the underlying business became larger and more valuable.

A business can have excellent numbers. But governance, controls and regulatory standing can determine whether those numbers ultimately translate into shareholder value.

The Question

"What should we have looked at beyond the numbers?"

In NSE's case: the institution behind the numbers — its governance, its controls, its regulatory standing.

Financial statements remain indispensable.

But analysing a business means understanding the institution producing those numbers, not just what it reports.

— Mahesh Ramanujam, FCA, DISA(ICAI) · R. Mahesh & Associates, Chennai

Sources
This newsletter is published for general information and educational purposes only. It is commentary on matters already in the public domain, drawn from company filings and contemporaneous reporting. This content does not constitute professional, legal, tax, accounting, audit, or investment advice and creates no client or advisory relationship. Views expressed are the author's own.  ·  Beyond the Financial Statements is written by Mahesh Ramanujam, FCA, DISA(ICAI), ICAI Member No. 206817, proprietor of R. Mahesh & Associates, Chartered Accountants, Egmore, Chennai – 600 008. © 2026 R. Mahesh & Associates. All rights reserved.

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