The share price of BSE has jumped over 6% after the stock exchange delivered strong earnings for the December quarter (Q3FY26). BSE continued to deliver robust revenue growth of 60.8% YoY and transaction charges surged 86.4% YoY. Following the results, leading brokerage house Nuvama reiterated its positive stance on the stock and projected nearly 30% upside from current levels.
Let’s take a look at the brokerage view, target price and key investment rationale behind this call –
According to the brokerage report, Nuvama has maintained a ‘Buy’ rating on BSE and raised its target price to Rs 3,760, up from Rs 3,130 earlier. This implies an upside potential of around 30% from the current market price of about Rs 2,897.
Nuvama on BSE: Transaction revenue up, STT hike impact to be limited
The transaction revenue grew 86.4% YoY and contributed 76.6% to revenue mix, up 1050 bps YoY.
Management believes the recent increase in Securities Transaction Tax (STT) will have limited volume impact, as past hikes did not affect trading materially. They believe that the change may even encourage longer-term investing and mutual fund. participation.
Nuvama on BSE: Index options drive the turnaround
A key factor highlighted in the brokerage report is BSE’s performance in index options. “Despite expiry swap in September, 2025, BSE delivered Q3FY26 index options,” Nuvama stated. This helped the exchange gain market share and boost transaction-led revenues during the quarter.
The brokerage added, “BSE’s average daily premium turnover market share rose to 29.4%, which helped revenue grow 60.8% compared to last year and 16.4% from the previous quarter.” .
Nuvama on BSE: Margins expand as operating leverage kicks in
The brokerage house further in its report noted that higher volumes also improved profitability.
Better operating efficiency pushed EBITDA margins higher by 4.43 percentage points to 60.8%, leading to EBITDA growth of 73.5% compared to last year and 11.1% over the previous quarter, noted the brokerage house in its report.
The brokerage further noted that “Higher other income helped lift adjusted profit after tax to about Rs 600 crore, marking a rise of 71.5% from last year and 11.6% compared to the previous quarter.”
Nuvama on BSE: Momentum continues into January
The strong trend did not stop with the December quarter. The brokerage report also noted that trading activity in index options jumped sharply in January, helping BSE further increase its market share.
Given this momentum, the brokerage said, “Given the continued strength in trading volumes, the brokerage has raised its average daily premium turnover estimates for FY26 to FY28. As a result, earnings estimates for FY26, FY27 and FY28 have been revised upward by 8.2%, 21.9% and 21.1%, respectively.”
“This has led to an increase in the target price to Rs 3,760 from the earlier Rs 3,130, based on a valuation of 45 times earnings along with the value of BSE’s 15% stake in CDSL,” added the brokerage house report.
Nuvama on BSE: Revenue growth across segments
According to the brokerage report, BSE’s revenue from operations rose to around Rs 1,240 crore in Q3FY26. Transaction charges surged 86% year-on-year, supported by higher derivatives volumes. The cash market also showed some improvement, while businesses like mutual fund platforms, listing services and co-location services added steadily to revenues.
Nuvama on BSE: Costs rise but impact contained
Expenses did rise during the quarter, mainly due to higher contributions to the Settlement Guarantee Fund and increased technology costs. According to the brokerage report, however, lower employee expenses and reduced clearing charges helped offset some of this pressure. As a result, overall profitability remained stable.
BSE Q3FY26 performance recap
BSE reported a consolidated net profit of Rs 602 crore in the December quarter, compared with Rs 220 crore in the same period last year. Revenue from operations also climbed 62% year-on-year.
Conclusion
As per the brokerage house report, BSE’s volume growth, improving market share in index options, expanding margins and upward revision in earnings estimates support the positive recommendation. That said, they highlighted that any change in regulations or any adverse regulatory actions can have material impact on the business, and may also result in earnings volatility.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.