BSE share price will be in focus on Thursday after the stock exchange reported its September quarter earnings, with brokerage firm Jefferies retaining its cautious stance despite a modest beat on operating performance.
BSE reported a 44.9% year-on-year (YoY) increase in consolidated net profit to Rs 809.15 crore in Q2FY27, compared with the year-ago period. Revenue for the quarter rose 34.1% YoY to Rs 1,432.6 crore.
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However, on a sequential basis, consolidated net profit declined 7.4%, while revenue from operations fell 8.5%, reflecting moderation in activity in the equity derivatives segment, one of BSE's key revenue drivers.
Jefferies maintained its ‘Underperform' rating on BSE but raised its price target to Rs 3,100 from Rs 2,840 earlier. The brokerage said the modest earnings beat does not materially change its cautious outlook on the stock.
BSE's operating performance was supported by better cost management. Operating expenses grew 19% YoY, significantly slower than revenue growth, resulting in a 400-basis-point expansion in EBITDA margin to 68.7%. This was also ahead of Jefferies' estimate of 67.1%.
The brokerage expects higher options Average Daily Turnover (ADTO) to drive a 3-4% increase in its FY28-29 earnings per share (EPS) estimates. However, it believes the pace of options growth may become difficult to sustain as market share gains become increasingly challenging.
BSE's index options premium market share increased 115 basis points sequentially to 35.6% in Q2FY27. The market share continued to improve in October 2026, although Jefferies noted that the growth was partly supported by an additional expiry compared with the National Stock Exchange (NSE).
Meanwhile, BSE's cash market revenue remained relatively weak, growing just 9% YoY despite a 34% increase in overall turnover. Jefferies attributed the divergence to a 28% decline in special-rate turnover, which affected blended realisations.
The brokerage highlighted several risks to BSE's growth outlook, including the possibility of slower market share gains in FY28, regulatory changes such as the securities transaction tax (STT) hike and RBI's bank guarantee norms, and increasing competition in co-location services.
It also flagged concerns around BSE's dependence on Sensex weekly options and whether its valuation premium over NSE can be sustained. The anticipated management transition by June 2027 is another factor warranting attention.
Jefferies' revised price target of Rs 3,100 is based on 31 times its estimated December 2028 earnings, implying a 15% discount to NSE.
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