Improved mkt sentiments fail to lift BSE, September quarter profit down 41%

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SummaryDespite a revival in the market activity in September, the Bombay Stock Exchange’s earnings for the three months to September dipped 41% compared to the last year.

Despite a revival in the market activity in September, the Bombay Stock Exchange’s (BSE) earnings for the three months to September dipped 41% compared to the last year. Both operating and net margins showed a y-o-y contraction, albeit not as much as in the June quarter.

Sequentially, net profit improved due to a lower base for the June quarter and lower burden of the costs related to the Liquidity Enhancement Incentive Programme (LEIPS).

According to the numbers posted on its website, BSE’s net profit for the quarter stood at R32.8 crore against R55.9 crore last year. The topline failed to show a rebound, but saw a marginal q-o-q and y-o-y decline of about 3% each. Net margin declined about 1,700 bps.

The sequential performance improved significantly as the operational profit increased for the first time in the last five quarters and net earnings more than doubled compared to the June quarter. The primary reason for this recovery, despite the topline dipping 3% to R121 crore, was a lower burden of the LEIPS cost, which is reported as an exceptional item in the results.

Compared to the previous two quarters when the exchange spent about R40 crore each under the incentive programme, the cost declined 37% to R25 crore in the September quarter. In June last year, the BSE had said that it plans to spend R108 crore on such liquidity enhancement schemes as India’s oldest exchange readied itself to gain a higher stake of the rising derivatives volume. Since then, its share in the total derivatives volume has increased, but remained volatile.

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