The BSE share price surged over 5% intra-day after a robust second quarter performance driven by record derivatives activity and solid traction in its mutual fund platform. Its Q2revenue rose 44% year-on-year to Rs 1,070 crore, while profit after tax climbed 61% YoY to Rs 560 crore in the September quarter. A 57% jump in transaction charges and higher co-location income lifted operating margin to 65%, from 52% a year ago.
The Street cheered the numbers, but brokerages remain split on how much of this strength is already priced into the stock.
BSE: Derivatives, co-location and mutual funds power growth
In Q2, transaction charges contributed 74% of total revenue, with equity derivatives accounting for nearly 79% of that, up sharply from last year. Derivative turnover averaged Rs 1.5 lakh crore per day, while co-location revenue doubled sequentially to Rs 46 crore after new throttling fees were introduced in July.
The StAR MF platform posted 19% revenue growth to Rs 70 crore, as transactions rose 23% to 201 million. The platform now serves over 8 crore investors and retains an estimated 85% market share, according to the brokerages.
Nuvama on BSE: Further upside likely
Nuvama Institutional Equities reiterated a ‘Buy’ rating and raised its target price to Rs 3,130 from Rs 2,820, citing continued momentum in derivatives and expanding market share.
“For Q2FY26, BSE delivered index options market share of 27.1%, driving revenue up 43% year-on-year. Operating leverage lifted EBITDA margins to 62.5%, with EBITDA growing 75%,” Nuvama said.
The brokerage expects revenue to rise to Rs 4,369 crore in FY26, with adjusted profit at Rs 2,173 crore, up 75% year-on-year. It values the stock at 45 times forward earnings and expects return on equity of 42.5%, one of the best in the sector.
Motilal Oswal on BSE: Cautious stance
Motilal Oswal Financial Services maintained a ‘Neutral’ rating with a target of Rs 2,800, arguing that valuations already reflect near-term positives.
“BSE continues to demonstrate broad-based growth, supported by stable retail activity and expansion in STAR MF and index businesses. However, we believe valuations already capture most of the positives,” the brokerage said.
It expects earnings per share to rise to Rs 75.1 by FY28, but sees return on equity moderating to below 30% as the growth base expands.
Brokerages on BSE: Strong fundamentals, but regulatory risk stays
Both firms expect BSE’s earnings momentum to continue, but warn of potential regulatory risk if the Securities and Exchange Board of India alters derivative expiry structures.
Nuvama modelled scenarios where restrictions on weekly expiries could cut BSE’s FY27 turnover by up to 40%, reducing EPS by 20% and the fair value to Rs 2,010. A more favourable setup, it said, could lift EPS by 16% and the target to Rs 3,620.
