BSE shares up 291% in 6 months; upside capped, suggests Motilal Oswal's stock price target

Shares of BSE, which have rallied 291 per cent in the last six months, may have limited left.  Following the stock exchange's four-fold jump in September quarter results, the  domestic brokerage Motilal Oswal Securities suggested a 'Neutral' stance on the multibagger stock with a share price target of Rs 2,250, which suggested a mere 5 per cent potential upside over its last closing price of Rs 2,135. The scrip had jumped 6.18 per cent in the special Muhurat trading on Sunday.

Motilal Oswal said Sensex and Bankex derivative contracts are witnessing significant traction from market participants after the relaunch. It noted that BSE has increased transaction charges on Sensex options (only on near expiry), with effect from November 1. Thus, the derivative segment would see strong revenue growth, the brokerage said.

To recall the Bankex expiry was shifted to Monday from mid-October and since then significant interest has been generated, the brokerage said.  In the last expiry, 13.5 million trades were placed with Rs 10 lakh crore notional turnover. A total of 205 members participated in the same, Motilal Oswal said adding that the Sensex trajectory took 8-12 weeks to reach this scale, but for Bankex it happened in four weeks.

"We have upgraded our EPS estimates by 16 per cent/23 per cent for FY24/FY25 to factor in the better-than-expected equity cash volumes and increasing treasury income from clearing and settlement funds. Reiterate Neutral with a one-year target price of Rs 2,250," it said.

Motilal Oswal said the relaunch of BSE derivatives products has proved to be a trend-changing measure and that the increased member participation, increasing awareness about products and a shift in Bankex expiry would continue to drive market share gains for BSE.

At present, BSE has a 10 per cent market share in notional turnover and 3 per cent premium turnover market share in equity derivatives segment. Motilal Oswal Securities expects this to scale up going ahead.

"Other levers that will support growth over the medium term include: continued momentum in the Star MF business, growth in cash segment, levy of charges on the INX platform, possibility of levying a fee for listing of debt securities, start of operations at its Power Exchange, and  commencement of revenue from its Gold Spot exchange," Motilal Oswal said.

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