Wednesday saw a 5% increase in the price of BSE shares, continuing the surge for the third straight day as experts continued to be optimistic about the company and forecast more growth. On the NSE, BSE shares surged as high as 5.14% to ₹5,729.00 per.
The price of the BSE stock has increased by 20% in only three months, and in just one year, it has produced multi-bagger returns of over 150%. In just three years, the stock has increased by 720%.
The stock exchange in Asia, the BSE, is seen to be very adaptable and will prosper despite stricter regulations on index derivatives. Even though the terminated weekly contracts account for 21.3% of its index option premium volumes (ADPTV), they think there is a huge opportunity to expand the clientele.
Compared to its rival NSE, the Bombay Stock Exchange, or BSE, has over 29% of the notional options turnover thanks to product innovation, rising member engagement, and lessened regulatory influence.
Although industry volumes have been affected by the ban on weekly expiry contracts per exchange as of November 2024, analysts noted that the BSE has seen improvements in premium ADTO, with 9% absolute growth in December 2024, premium turnover market share of 15%, and the premium-to-notional turnover ratio of 10 bps last month compared to an average of 7.3 bps over the preceding three months.
Jefferies Upgrades:
Jefferies, a foreign firm, increased the target price for BSE shares from ₹3,500 to ₹5,250 and upgraded them to “Hold.”
In its base scenario, Jefferies projects a 25% operating EBITDA CAGR and a 19% revenue CAGR during FY25–27E, with margins increasing by six percentage points to 58%. With a target price of ₹5,250 based on 35x FY27E P/E, it anticipates a PAT CAGR of 23% for the BSE.
With a target of ₹6,500 based on 40x FY27E P/E, the brokerage company anticipates a 25% revenue CAGR during FY25-27E, a 30% operating EBITDA CAGR, margins rising by about eight percentage points to 60%, and a 30% PAT CAGR.
Nuvama Starts Reporting:
When Nuvama Institutional Equities started covering BSE stock, they had a “Make a purchase rating and set a target price of ₹6,730 per share. This was based on a target PE of 50x FY27E EPS plus the value of its investment in CDSL, which indicates a 23.5% increase from Tuesday’s closing price.
“Considering the duopolistic nature of the industry and the relative valuation of Indian capital market infrastructure plays like CDSL, KFin Technologies, MCX, and CAMS, we think a 50x PE for the company is appropriate,” Nuvama stated.
It predicts that the market share of BSE’s equity index option ADPTV would increase from 3.1% in FY24 (currently 11.9% in Nov-24) to 14.9% in FY27E. The BSE increased Transaction fees from ₹500 per ₹10 million to ₹3,250. According to Nuvama, growing volumes and transaction fees would probably result in a 69.9% CAGR for FY24–27E transaction fees.
Additionally, Nuvama anticipates that larger contract sizes would lead to cheaper clearing fees, which will support the growth of the EBITDA margin throughout FY24–27E.
Over FY24–27E, transaction income is projected to rise at a scorching CAGR of 69.9% to ₹22 billion, accounting for 58% of total revenue. Despite upcoming regulatory changes, we expect BSE to maintain robust revenue growth, with an anticipated operating revenue CAGR of 39.9% during FY24–27E. We also predict that the EBITDA margin will increase by 2,879 basis points from FY24 to 57.6% by FY27E, resulting in an EBITDA CAGR of 76.3% from FY24 to FY27E. By FY27E, the APAT margin is anticipated to increase by 2,055 basis points over FY24 to 45.6%. We predict that RoE will rise from 11.6% to 37.9% by FY27,” Nuvama continued.
The Best Option for Motilal Oswal in 2025:
One of Motilal Oswal’s top selections for 2025 is BSE shares. The brokerage has recommended a “Purchase” call on the company and set the target price for BSE shares at ₹6,500 each.
“We anticipate that in FY26 and FY27, the premium-to-notional turnover ratio will increase to 12 bps or 13 bps, increasing BSE’s revenue.” Reductions in clearing and regulatory expenses will boost profitability. Furthermore, the expansion of co-location services and steady momentum in the Star MF platform will support BSE’s further growth, according to MOFSL.
It anticipates that during FY24–27E, BSE will record a CAGR of 44%–74% of revenue/EBITDA–PAT because it thinks the premium-to-notional turnover ratio would counterbalance the volume reduction. BSE shares were up 4.61% at ₹5,700.00 each on the NSE at 10:10 AM.
