From ₹458 to ₹3,137 in a year: BSE shares surge to another record high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of the Bombay Stock Exchange (BSE) Ltd. are trading with gains of 10% on Tuesday and have hit a new record high in today’s trading session. The stock is up for the second day in a row.

BSE shares have risen 35% in the last one month. For the month of April, the stock has risen 24.4%, following a 6.3% gain in March, a 2% gain in February and a 4.6% gain in January. Barring December 2023, the stock had gained every single month between April and November last year.

Over the last 12 months, the stock has risen nearly 7x. The stock had made a 52-week low of ₹458 last year.

Last month, brokerage firm Investec had upgraded BSE to “buy” from its earlier rating of “hold” and had also placed a price target of ₹2,800 on the stock. Post Tuesday’s move, BSE has crossed Investec’s price target.

Investec had written in its note that it is expecting an improved margin profile for BSE in the March quarter and anticipates further market share gains, given the rapid scale-up of its BANKEX product.

BSE’s options market share has nearly tripled sequentially to 15% in March 2024 from 4.2% in December.

Out of the eight analysts that have coverage on BSE, six of them have a “buy” recommendation, while the other two have a hold. The stock is now trading higher than most of the analysts’ price targets. Only a firm named ULJK financial services has a price target of ₹3,800 for BSE.

Based on the 12-month Bloomberg consensus price target, the street expects a potential downside of 3% for BSE going forward.

“Currently BSE is trading at one-year forward PE multiple of 40x on FY25 basis and given the strong earnings potential over the next few years driven by operating leverage, we expect this premium valuation to sustain,” said Gautam Baid of Complete Circle Stellar Wealth PMS on April 4.

“However, the two key risks with BSE’s business. One, any significant regulatory clampdown on derivative segment can be a headwind and second, any slowdown in the equity market participation can also be a headwind for the BSE because its fortunes are linked to the equity markets,” he added.

Shares of BSE are trading 10% higher at ₹3,135.95.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow