BSE Ltd. share price target

Younger customers dominate the customer base ................................................................... 8 NSE dominates the cash market; BSE holds ~7% ..................................................................... 9 BSE has rapidly gained share in index options......................................................................... 10 Limited scale in stock options ........................................................................................................12 BSE share still negligible in index and stock futures ..............................................................12 Currency derivatives Strict environment hampers growth .............................................. 13 Commodity derivatives New-age products to drive growth.......................................... 14 Capital markets navigate a challenging regulatory environment ......................................................14...

BSE reported an operating revenue of ~INR15.6b (in line), reflecting a growth of 85% YoY/26% QoQ. This was driven by 114% YoY growth in transaction charges, while revenue from services to corporates declined 5% YoY.

BSE enjoys strong prospects of volume growth across segments (options, cash as well as MF platform) led by derivatives, which has been our investment thesis for the stock.

BSE reported operating revenue of ~INR10.7b (5% beat), up 44% YoY/12% QoQ, mainly driven by 57% YoY growth in transaction charges. For 1HFY26, revenue grew 50% YoY to INR20.3b.

The regulator is considering measures to increase the tenure of the options segment. One of the measures could be shifting from weekly to monthly expiries for index contracts.

BSE enjoys strong prospects of volume growth across segments (options, cash as well as MF platform) led by derivatives, which has been our investment thesis for the stock.

We had upgraded BSE to BUY from Neutral in our thematic report titled “Indian Capital Market: A golden era!” published in Dec’24. We followed up in Jan’25 with BSE as one of our top ideas for 2025.

Black & White

Expanding Market Share and Unlocking New Opportunities

BSE reported a strong performance in 2QFY25 as PAT jumped 192% YoY and 31% QoQ to INR3.46b (20% beat), driven by strong revenue growth and better-than-expected operational efficiency.

BSE reported a strong performance in 1QFY25 with a PAT of INR2.64b, an increase of 160% YoY and 148% QoQ (6.5% beat).

Bombay Stock Exchange (BSE) is consolidating on its newly-found traction in equity index options segment. Volume growth has been stellar in Q2FY24 (index options ADTO in Sensex moved from almost 0 in May’23 to INR 26trn in Sep’23) and now pricing has also improved substantially (INR 50/mn of premium turnover in Apr’23 to ~INR 260/mn on weighted basis as per notification in Oct’23).

Bombay Stock Exchange (BSE) has made notable changes in the rules governing derivative products including contract size and expiry day. This has led to traction in derivatives (INR 4.3trn notional ADTV in Jul’23 from almost nil in Mar’23). The establishment and acceptance of BSE derivatives is our investment thesis.

Bombay Stock Exchange (BSE) has made notable changes in derivative products including contract size and expiry day. This has led to traction in derivatives (Rs1trn ADTV in Jun’23) and could grow further given the small base. Cash volumes and MF platform orders maintain strong momentum.

BSE is India's leading exchange group and has played a prominent role in developing the Indian capital market. It is a corporatized and demutualized entity which provides an efficient and transparent market for trading in equity, debt instruments, equity derivatives, currency derivatives, commodity derivatives, interest rate derivatives, mutual funds and stock lending and borrowing. It also possesses a dedicated platform for trading in equities of small and medium enterprises (SMEs) that has been highly successful. They also have a dedicated MF distribution platform BSE StAR MF which is India Largest Mutual Funds...