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ICICI Securities Report
We were positive on BSE Ltd.'s equity option revenue potential in August 2023 which led to our upgrade to 'Buy'. However, the subsequent tripling of the stock price led to our downgrade to 'Hold' in November 2023.
Yet, we believe Dec-23 volumes have set the possibility of an accelerated frontier for growth for BSE. Accordingly, we revise our estimates upwards leading to core profit after tax upgrade of 23/9% for FY24E/25E along with the introduction of FY26 estimates.
We upgrade the stock to 'Buy' with a revised target of Rs 2,686 (Rs 2,411 earlier) after rolling over to FY26E on a 35 times (40 times earlier, cut factoring a higher base now) FY26E core PAT of Rs 9.2 billion plus cash and 15% value of Central Depository Services India Ltd. post holding company discount of 20%. Risks include possible drop in volumes.
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