BSE celebrated its 149th foundation day on 10th July,2023 and launched a new logo for the big day. BSE’s shares today ended at Rs 701, gaining nearly 1%. ICICI securities set a target price of Rs 746 for BSE, implying an upside of 8.4% from its CMP. The current market capitalization of BSE is Rs 9,500 crore. BSE is likely to see a growth rate of 23% in its core PAT (profit after tax) during FY23-FY25E to Rs 250 crore.
CDSL stake sale, in June 2023 was done at a weighted average price of Rs 990 resulting in a cash inflow of Rs 5.2bn, which has resulted in a higher cash volume in BSE’s balance sheet, which the company will use for buyback as a result. BSE has also reported a strong turnaround in ADTV, a 39% growth rate on-month to Rs 52bn and derivatives have also risen to Rs 998bn in June, within a month. BSE improved its cash market share from 5.5% in April 2023, to 5.8% in May 2023 and 7.6% in June 2023, the report said.
To increase its profits and ensure higher volumes, BSE has undertaken some initiatives, one of which is the reduction of lot size for F&O contracts of Sensex from 10 to 15. BSE also changed the expiry day of its monthly, weekly and long-dated futures and options contracts to Fridays, from Thursdays, which is expected to increase product liquidity and create differentiation with NSE.
ICICI expects revenue from BSE’s currency derivatives at Rs 106mn/ Rs 115 mn in FY24E/ FY25E. Revenue of Rs 2.2bn in FY24E and Rs 2.6bn in FY24E is also expected as a resultant of strong recovery of cash volumes in FY24 till date. Listing fees, data and other charges, being the additional operating revenue, is expected to clock a CAGR of 5-7% between FY23-FY25E.
Stock Call: BSE
Add | CMP: Rs 701 | Target Price: Rs 746 | Upside: 8.4%
“We upgrade BSE to ADD (from Hold) with a revised target price of Rs 746 (earlier: Rs640)”, said the report.