Interesting times for India’s capital markets. Two of the country’s largest stock exchanges are in focus after their Q3 numbers. The Q3 performance of IPO-bound NSE was relatively soft while BSE delivered stellar Q3 results.
Following the December quarter results, domestic brokerage Motilal Oswal has offered a snapshot of how each exchange is shaping up operationally and financially.
BSE vs NSE: Listed player versus IPO-bound heavyweight
BSE is currently the only listed stock exchange in India. NSE, on the other hand is unlisted as of now. The anticipation with regards to the NSE IPO timeline has gained traction, especially after SEBI’s no-objection and the NSE board clearing the deck for IPO launch.
Motilal Oswal has assigned a ‘Neutral’ rating to BSE with a target price of Rs 3,350. This implies an upside of about 12%.
For NSE, no rating has been provided due to its unlisted status, though the brokerage has updated its earnings outlook. The brokerage noted, “We raise our earnings estimates to factor in the current volume run rate. Overall, we expect a CAGR of 15%/14%/15% in revenue/EBITDA/reported PAT over FY26-28.”
BSE vs NSE: Revenue growth of the two exchanges
BSE reported operating revenue of around Rs 1,240 crore in the December quarter. This marks a year-on-year growth of 62% and a sequential increase of 16%. According to Motilal Oswal report, this growth was largely supported by a sharp rise in transaction charges, especially from derivatives.
In comparison, NSE reported operating revenue of about Rs 3,920 crore for the quarter. This was lower by 10% compared to last year but 7% higher sequentially.
BSE vs NSE: Transaction charges and trading activity
Motilal Oswal noted that transaction charges at BSE jumped 86% year-on-year to roughly Rs 950 crore. This is driven mainly by strong growth in derivatives trading and the mutual fund platform. However, cash market transaction charges declined by 16%.
At NSE, transaction charges made up nearly three-fourths of total revenue. While these charges were down 12% year-on-year, they rose 9% quarter-on-quarter. This is by higher activity across cash, futures and options. Equity options continued to be the largest contributor to NSE’s transaction revenue during the quarter.
BSE vs NSE: Profitability and cost trends
BSE’s operating costs increased during the quarter, mainly due to higher contributions to the Settlement Guarantee Fund and rising technology expenses. However, lower employee and clearing costs helped cushion the impact. Other operating income also grew strongly. Treasury income, however, declined compared to last year.
NSE reported higher total expenditure of around Rs 950 crore, up 7% year-on-year. Employee costs rose sharply, while regulatory expenses declined.
BSE vs NSE: Subsidiaries and non-core income streams
The brokerage house further noted steady progress across BSE’s subsidiaries. The BSE Index Services business saw strong growth. Similarly, the clearing arm also expanded its trade-handling capacity significantly.
In the case of NSE, its subsidiaries played a meaningful role in supporting income. The clearing corporation, data analytics arm, index services and international financial services unit all contributed to overall earnings. In addition to this, the listing services revenue at NSE rose sharply during the quarter.
BSE vs NSE: Management commentary and future focus
For BSE, Motilal Oswal in its report noted that the core Settlement Guarantee Fund balance reached the regulatory threshold during the quarter. Management commentary also pointed to efforts to deepen participation in futures and revamp indices such as Bankex to improve liquidity.
In NSE’s case, management indicated that Settlement Guarantee Fund contributions have remained low in recent quarters. The exchange also outlined a pipeline of new products, including energy contracts, bond index derivatives and commodity offerings, subject to regulatory approvals. Infrastructure expansion, particularly in data centre capacity, remains a focus area.
BSE vs NSE: Brokerage outlook remains measured
Motilal Oswal raised its earnings estimates for both exchanges to reflect current trading volumes.
For BSE, despite revising earnings estimates higher, Motilal Oswal has maintained a Neutral stance, citing valuation considerations and cost trends.
For NSE, the brokerage expects revenue, operating profit and reported net profit to grow at a compounded annual rate of around 14-15% between FY26-FY28.
Conclusion
The BSE share price jumped over 6% in intra-day trade while the unlisted NSE share price has seen smart uptick in the last few weeks. Going forward the NSE IPO timeline and the impact of F&O STT hike on the revenue and volume of stock exchanges are the key factors to watch out for.
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.