For decades, the Bombay Stock Exchange was more of a museum piece. Asia’s oldest bourse, home to the Sensex index, had been reduced to playing second fiddle to the National Stock Exchange. Its relevance was shrinking, its trading volumes were weak, and its revenues were stagnant. Between financial year 2014 (FY14) and financial year 2020 (FY20), revenues moved from Rs 485 crore to just Rs 606 crore. Net profit actually declined. But then the impossible happened.
The resurrection
From financial year 2021 (FY21) onward, numbers began to change — and dramatically. By financial year 2025 (FY25), revenues had hit Rs 3,212 crore, operating profits had ballooned nearly tenfold, and net profit crossed Rs 1,300 crore. Earnings per share (EPS) had leapt from Rs 3.6 to Rs 32.7 in FY25.
For investors used to treating BSE like dead money, this was nothing short of a resurrection.
The stock price told the story even better. In five years, it rose 3,700%, with its multiples being re-rated across the board. In the first quarter of financial year 2026 (Q1 FY26) alone, net profit doubled year-on-year to Rs 539 crore, making it the best quarterly performance in the exchange’s 150-year history.
But here’s the thing about resurrections. They make for fantastic stories but not always great investments.
The party trick: Derivatives
The single-biggest driver of this rocket ride was derivatives. More specifically, weekly Sensex index options.
By offering contracts that expired on Tuesdays, away from the National Stock Exchange’s dominant Thursday expiries, BSE found itself a profitable niche. Traders rushed in, premium turnover ballooned, and suddenly the exchange wasn’t an also-ran anymore.
At its peak, BSE grabbed nearly 38% of premium turnover on Tuesdays. For an institution that once struggled to hit double digits in market share, this was a transformation.
But all good things usually come to an end.
And so, in September 2025, the magic trick is gone. The Securities and Exchange Board of India (SEBI) has ruled that weekly expiries must be standardised. BSE’s Tuesday edge moves to Thursday, right into competitor Nifty’s nook. On Thursdays, BSE barely commands 8% share. Overlay that with the weekly distribution of volumes, and the exchange could see a 350–400 basis point hit to its market share. That’s not a temporary dent, it’s a structural change.
Valuation: Nosebleed territory
The stock’s meteoric rise has left it trading at over 50 times the price-to-earnings (P/E) ratio.
Compare that to global peers: Intercontinental Exchange in the United States trades at around 23 times, Hong Kong Exchanges and Clearing at 34 times, and the London Stock Exchange at 25 times. BSE, in other words, is valued at more than double the average of some of the world’s most sophisticated exchanges.
Which is understandable. Valuations are always forward-looking, and when breakneck growth is visible, investors are willing to pay up. But projections already show moderation. Revenues are expected to rise 28% in FY26, then slow further to high single digits in financial year 2027 (FY27). Profits will keep expanding, but the era of triple-digit surges seems to have come to an end.
The hope trade
To be fair, BSE isn’t a one-trick pony. The exchange has other growth engines.
The Star Mutual Fund (Star MF) distribution platform, which processed 183 million orders in Q1 FY26, continues to scale. A revamped Star MF 2.0 promises faster order processing and greater capacity.
Small and medium enterprise (SME) listings are booming, making BSE the exchange of choice for smaller companies looking to raise capital. The initial public offering (IPO) pipeline remains healthy. Cash market share, once stuck below 5%, is nudging higher, aided by reforms like the Common Contract Note (CCN).
Co-location infrastructure, where high-frequency traders pay for server racks close to the exchange, is expanding, which is helping it add a reliable annuity income stream.
To be fair, all these are important levers. But the central question remains: are they enough to justify paying double the multiple of global peers? The derivatives frenzy disguised BSE as a rocket. Strip that away and what remains is a steady, well-run exchange. Solid, yes. Spectacular, maybe not.
The bigger picture
What BSE really mirrors is India’s larger financialisation story. Over the past decade, millions of new investors have entered the market. Dematerialised (demat) accounts have exploded. IPOs arrive in waves, mutual fund penetration climbs year after year, and options trading has become a national obsession.
BSE’s rise has less to do with its own brilliance and more to do with riding this historic wave.
That raises an uncomfortable question: has the tide been mistaken for the boat itself?
Because tides turn. Regulators can change rules overnight, as they just did with weekly expiries. Volumes can shift between exchanges in a flash. And sentiment, the same force that took BSE from nowhere to stardom, can just as easily reverse.
Beyond the hype
None of this is to say BSE will fade back into irrelevance. The business today is far more diversified than it was a decade ago. Its platforms, including SME, Star MF and co-location, give it multiple levers of steady growth.
Moreover, it will remain a critical part of India’s capital markets.
But that’s exactly the point. The story has gone from being explosive to steady. That’s not a bad thing — unless you’ve bought the stock expecting another 3,700% rally.
The bottom line
BSE’s journey is extraordinary. From being dismissed as a relic to becoming the poster child of India’s financialisation boom, its transformation is awe-inspiring. But markets are unforgiving judges. They don’t reward past glory; they discount future growth.
Right now, that future lacks fireworks.
For early investors, the rewards are already realised. For those looking to enter now, the problem is simple: perfection is already in the price. And perfection rarely lasts.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s) and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.