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BSE Stock Faces Scrutiny Over Reliance on Single Product
6 Aug
Summary
- BSE's FY27 EPS forecast P/E ratio is 48, noted as ignoring single product reliance.
- Analysts show mixed ratings: 11 buy, 7 hold, and none with a sell recommendation.
- Revenue surged 63% year-on-year, driven by equity derivatives and new product initiatives.
The Bombay Stock Exchange (BSE) is currently valued at 48 times its projected Financial Year 2027 Earnings Per Share. This valuation has drawn attention from analysts, with Jefferies noting that it may not fully account for the exchange's dependence on a single product. However, a closer look at analyst sentiment reveals a predominantly positive outlook.
Following the June quarter results, none of the 18 analysts covering BSE have recommended selling the stock. Instead, 11 analysts suggest a 'buy' rating, while seven others recommend holding. This divided yet largely optimistic view is reflected in price targets, with East India Securities setting the highest at ₹5,250.
BSE reported a substantial 63% year-on-year revenue increase for the quarter. This growth was primarily driven by a strong performance in equity derivatives, which compensated for a high base in the previous quarter. The exchange is also focusing on new product initiatives, including IT derivatives and corporate bond platforms.
Despite overall healthy operating trends, potential risks are being monitored. Jefferies anticipates a sequential drop in Average Daily Turnover in the second quarter and flags concerns about weekly options expiries due to the Closing Auction Session. Management transition is also identified as a key factor to watch.
