BSE share price has come under significant selling pressure. The global brokerage house Jefferies turned more negative on the stock. The brokerage has downgraded BSE to ‘Underperform’ from its earlier stance and cut the target price sharply to Rs 2,940 from Rs 3,520.
At the revised target, Jefferies sees around 16% downside from the current market price.
Let’s take a look at why the brokerage house is cautious on this stock –
The concern is not simply about BSE’s recent trading volumes. Jefferies believes several pressures are coming together at a time when the market is already expecting strong growth in the exchange’s options business.
BSE’s options growth faces a reality check
A key part of the concern is BSE’s exposure to domestic proprietary, or prop, traders.
According to the Jefferies report, these traders could account for a significant portion of BSE’s options activity. Jefferies estimates that domestic prop traders represent around half of BSE’s notional turnover.
The segment is now facing pressure from three directions. Jefferies noted, “Domestic prop traders have been hit by three headwinds – STT hike, RBI bank guarantee (BG) norms and Closing Auction Session (CAS).”
The impact is already visible in recent activity. BSE’s options Average Daily Turnover (ADTO) was down 12% month-on-month in August 2026, based on month-to-date data cited by Jefferies.
Sensex contracts: Can market share expectations hold?
This is where the brokerage sees another problem.
The market has been expecting BSE to gain further share in the options market, particularly through its Sensex contracts. But Jefferies believes the pace of those gains may not be enough to support current earnings expectations.
The brokerage noted, “The expiry day market share for BSE is now similar to NSE.”
However, gains beyond the key expiry days have been slower.
Jefferies also pointed out that BSE’s ADTO has remained below Rs 270 billion for the past three months, while consensus estimates assume a recovery and further growth.
BSE: Jefferies cuts earnings estimates
The brokerage has responded by lowering its earnings expectations.
According to the report, Jefferies has cut its FY27-29 Earnings Per Share (EPS) estimates by 5-12%. The reduction reflects slower expectations for ADTO growth and higher clearing costs.
The brokerage expects trading activity to recover in the second half of FY27 as CAS-related issues ease. But it is not assuming a strong market-share expansion beyond that.
Jefferies said, “We cut FY27-29 EPS by 5-12% due to slower ADTO growth expectations and higher clearing costs.”
Is there still a way out?
BSE does have some levers to protect earnings.
Jefferies believes the exchange could increase options fees. The brokerage estimates that this could add around 6-7% to EPS.
Another option is to increase messaging fees for its colocation facility, which could potentially add around 8% to Profit After Tax (PAT).
Why Jefferies cut the target price for BSE
With earnings estimates under pressure, Jefferies has reduced its valuation multiple as well. It now values BSE at 34 times September 2028 core EPS, compared with its earlier fair multiple of 36 times.
The brokerage therefore cut the target price by 16% to Rs 2,940.Jefferies in its report added, “Should we assume flat market share in FY28-29 relative to FY27e, there could be another 2-5% earnings downside.”
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This 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 before making any investment decisions.