Ten reasons to buy BSE Limited on declines
- Strong earnings. Q2 FY27 net profit excluding CDSL’s share rose 45.7% to Rs 783 crore.
- Q1 was stronger. Net profit in Q1 FY27 was up 62% year on year at about Rs 874 crore. This is a different profit basis from the Q2 figure above, so the two aren’t directly comparable.
- Derivatives volumes are recovering. Management signalled a strong recovery in derivatives trading after a sequential slowdown.
- Estimates are being raised. Motilal Oswal raised its FY27 and FY28 earnings estimates by 3% and 5%, citing the strong October volumes.
- Brokerages are positive. Motilal Oswal reiterated Buy with a Rs 4,200 target. JPMorgan stays Overweight with a Rs 3,960 target, about 10% upside.
- Market share gains continue. Even Bernstein, the more cautious voice, acknowledged that volume trends and BSE’s market share gains remained strong.
- The broader market is supportive. A broad-based equity rally also lifted sentiment on the day.
- There is room below the high. The 52-week high is Rs 4,446.80, so the stock is still well below that level.
- New product lines. BSE has partnered with MMTC-PAMP to build India’s electronic gold receipts market.
- Operating leverage. An exchange has a largely fixed cost base, so extra volume flows through to profit at high incremental margins.
BSE and NSE - Why it scores high conviction buy
Operational metrics
- Clearing share is moving in BSE’s favour. NSE Clearing’s share of cash market settlement turnover slid to 88.42% from 94.24%, and its equity derivatives clearing share slipped to 91.04%. NSE is losing share in clearing, and BSE is the beneficiary. That data is from about four to five months ago, so check for newer figures.
- Broader listings and more ways to grow. BSE has over 5,500 listed companies against NSE’s roughly 1,600. One analyst quoted in the NSE-vs-BSE debut coverage said BSE offers more sensitivity to incremental market-share gains, derivatives scaling, SME listings and data monetization. The listings figure is from an older source.
Profitability
- Faster recent profit growth. BSE’s Q2 FY27 net profit excluding CDSL’s share rose 45.7% to Rs 783 crore, after Q1 profit growth of about 62% year on year. I couldn’t find NSE’s comparable quarterly growth, so I can’t say how the two rates compare. NSE’s absolute profits are certainly larger, but growth from a smaller base is where BSE has the edge.
Future outlook
- Operating leverage on market-share gains. Each point of share BSE wins from NSE adds more to BSE’s earnings than to NSE’s. Management has also signaled a strong recovery in derivatives trading, and Motilal Oswal raised its FY27 and FY28 earnings estimates on the strong October volumes.
- More diversified new revenue. BSE is building ancillary lines such as the MMTC-PAMP partnership to develop electronic gold receipts. That reduces its reliance on derivatives fees.
Returns :
Last One year - 55%
Last 6 months - flat 2.6% consolidation phase
Last 1 month - 20%