BSE shares get an upgrade as JPMorgan expects CAS overhang to ease after SEBI paper

Shares of BSE Ltd. fluctuated between gains and losses on Tuesday, September 15, even after JPMorgan upgraded the stock to "Overweight" from its earlier rating of "Neutral". However, JPMorgan cut its price target on the exchange to ₹3,950 from the previous ₹4,090.

The revised target implies an upside of around 17% from BSE's Friday closing price of ₹3,384.

JPMorgan said the decision to delink derivative settlement from the Clearing and Settlement (CAS) mechanism is a direct policy response to the market disruption that has weighed on BSE since CAS was introduced.

The brokerage expects the overhang from CAS to ease, which should support a gradual recovery in volumes for exchange stocks.

However, even while factoring in a recovery, JPMorgan has trimmed its near-term estimates to account for the decline in volumes and a measured recovery path. It cut its average daily premium turnover (ADPTV) estimates for FY27, FY28 and FY29 by 9.8%, 11.8% and 14.1%, respectively.

Analysts on BSE

Bloomberg data shows a consensus 12-month target price of ₹3,775.89 for BSE, implying an upside potential of around 12% from Friday's close of ₹3,384. Of 19 analysts with coverage on the stock, 10 have a "Buy" rating, six say "Hold", while three havea "Sell" recommendation on the stock.

BSE Q1 results

BSE reported a 9.6% sequential increase in consolidated net profit to ₹874 crore in the June quarter, from ₹797 crore in the March quarter, supported by resilient operating income and higher investment income. Revenue was largely flat at ₹1,566 crore, up 0.2% quarter-on-quarter, while total income rose 5% to ₹1,707 crore.

Transaction charges, BSE's largest revenue source, increased 1% sequentially to ₹1,328 crore, while other operating income rose 5%. Listing services income declined 15% to ₹101 crore, reflecting a softer primary market, while investment income more than doubled to ₹135 crore from ₹62 crore.

Consolidated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) stood at ₹1,187 crore, with a net profit margin of 51%. Earnings per share came in at ₹21.22, and consolidated net worth stood at ₹7,547 crore.

BSE's average daily cash market turnover rose to ₹99,553 million in the June quarter from ₹71,801 million a year earlier, while average daily premium turnover in equity derivatives stood at ₹11,550 million.

Shares of BSE are trading at the flat line on Tuesday at ₹3,383. The stock is up 30% so far this year.

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