- BSE shares dropped 4.5% to Rs 3,292.30, extending a four-day decline
- Jefferies downgraded BSE stock to Underperform from Hold and cut price target
- Price target reduced from Rs 3,520 to Rs 2,940 with EPS estimates cut 5-12%
BSE shares fell as much as 4.5% to Rs 3,292.30 on Monday, extending their decline for a fourth consecutive trading session after Jefferies downgraded the stock to Underperform from Hold and cut its price target to Rs 2,940 from Rs 3,520.
The stock has fallen 8% over the past four trading sessions. Trading volume was more than four times its 20-day average, according to Bloomberg data.
Jefferies' downgrade reflects concerns over risks to BSE's revenue from domestic proprietary traders, which the brokerage estimates accounts for about 50% of notional turnover. The brokerage also cited the higher securities transaction tax, RBI norms on bank guarantees and changes related to CAS as headwinds for the exchange.
Jefferies cuts BSE price target
Jefferies lowered its price target for BSE to Rs 2,940 from Rs 3,520 while cutting its FY27-29 earnings-per-share estimates by 5-12%.
The brokerage said BSE's options average daily traded turnover for August so far is down 12% from July. It also said the exchange's market-share gains outside T+0 and T+1 days have slowed.
According to Jefferies, the revenue generated from domestic proprietary traders could come under pressure. The brokerage said this revenue represents about half of BSE's notional turnover.
BSE analyst consensus
Despite Monday's decline, most analysts tracked by Bloomberg remain positive on the stock. Eleven of the 18 analysts have a Buy rating, while six have a Hold rating and one has a Sell rating.
The analyst consensus price target tracked by Bloomberg is Rs 4,014.18. That implies a potential return of about 21% from the last regular trade.
Jefferies' revised target of Rs 2,940 is below the Bloomberg consensus estimate.
Jefferies flags pressure on BSE's domestic prop-trader revenue and cuts its price target to Rs 2,940.
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