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HDFC Securities Institutional Equities
BSE - Strong growth momentum
BSE Ltd. delivered a strong quarter with revenue rising 16.4% QoQ and 60.8% YoY, led by sustained traction in transaction revenue and strong book-building and listing fees. Adjusted PAT (ex-labor laws provision, additional SGF, and impairment) came in at Rs 650 crore vs our estimate of Rs 620 crore.
Transaction revenue, contributing 77% of total revenue, surged 26% QoQ on continued gains in options market share and recovery in industry volumes. BSE's options premium market share improved to 26.8% in Q3 FY26 vs 24.4% in Q2, with premium ADTV of Rs 19,500 crore (+30% QoQ), and further rose to 30% in Jan-26.
Adjusted Ebitda margin expanded 97 basis points QoQ to 65.6% (reported 62.5%), while SGF contribution stood at Rs 46 croren (~5% of transaction revenue), higher than the mandated threshold.
Colocation revenue was stable at Rs 48 crore vs Rs 46 crore in Q2, and BSE plans to add 20 racks by Q4, taking the total to 500 to support future growth. The share of longer-dated options rose to 5%, with management targeting further growth through higher institutional participation.
The brokerage raises EPS estimates by 8-10% on better volumes, projecting robust FY25–28E revenue/EPS CAGRs of ~30/36%.
HDFC Securities maintains an Add rating with a revised target price of Rs 3,310, based on 42x core FY28E PAT plus CDSL stake and net cash ex SGF; the stock trades at 43x/37x FY27/28E EPS.
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