Shares of the Bombay Stock Exchange (BSE) plunged of over 6%, to intra-day low of Rs 4,471 on the NSE after brokerage firm Jefferies downgraded the stock to “underperform” from its previous rating of “hold” on Wednesday, October 15.
What’s The Revised Priced Target By Jefferies?
Despite the downgrade, Jefferies revised its price target for BSE shares higher to Rs 3,500, up from Rs 2,850, indicating a potential downside of 27% from Tuesday’s closing levels.
Jefferies highlighted that BSE shares have more than doubled in value since the release of the market regulator SEBI’s new F&O framework, fueled by expectations of increased market share.
Market Share Assumptions Considered “Stretched”
Jefferies noted that assuming a 25% decline in overall market volumes, the current valuations of BSE, which stand at 40 times financial year 2026 earnings, imply a market share increase from 13% in the current quarter to between 30% and 35%, alongside a 40% to 50% share in weekly contracts. The brokerage deemed these assumptions to be “stretched.”
What Are The Risks Involved in BSE?
The report further stated that these assumptions fail to account for risks from a more substantial impact on the overall market, limited spillover gains, and the potential for additional regulations.
According to Jefferies, the near-term risk-reward scenario for BSE appears “unfavorable,” leading to the downgrade. Previously, Jefferies had lowered its rating on BSE to “hold” from “buy” in April this year, with a minor cut in its price target to Rs 2,900 from Rs 3,000.
Stock Performance in Last One Year
BSE shares have delivered positive returns across various time frames. Over the last month, the stock has shown a positive return of 29.90%, indicating short-term growth. In the last six months, the performance has been even more impressive, with a substantial increase of 57.21%, showcasing the stock’s resilience and upward momentum.
Year-to-date, BSE shares have surged by 100.70%, emphasizing the stock’s positive trajectory in the current calendar year. Looking back over the last twelve months, the stock has demonstrated significant growth, surpassing 201.02%. These consistent positive returns underscore the stock’s strong performance and appeal to investors.
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