BSE Ltd, India's leading stock exchange, has extended its bull rally for the second consecutive day. On Friday, March 28, the share price zoomed by a whopping 15%, while it ended with nearly 5% gains in the previous closing bell. BSE has also surpassed analysts' target prices like Jefferies. The latest bullish trend can be attributed to the upcoming bonus issue reward announcement.
BSE Ltd Share Prices:
At the time of writing, BSE stock traded at Rs 5,318 apiece, up by 13.5% on NSE, with a market cap of Rs 71,993.15 crore. The stock jumped by at least 14.7% in the early trade after hitting an intraday high of Rs 5,373.75 apiece. BSE's 52-week high and low are at Rs 6,133.40 and Rs 2,115.00 apiece respectively.
BSE is only listed on its rival exchange, NSE.
In the previous session, BSE stock ended at Rs 4,684.35 apiece, higher by 5%. The last red in BSE stock was at Rs 4,474.70 apiece on March 26, and since then, overall the upside is about 16.9% in BSE.
Take a Poll
BSE Bonus Issue:
In its regulatory filing, BSE said, that a meeting of the Board of Directors is scheduled to be held on Sunday, March 30, 2025, to inter alia, consider and approve the proposal for the issue of bonus shares, subject to requisite approvals.
This will be the second bonus issue in 3 years by BSE. The first-ever bonus delivered by BSE was 2:1 with effect from March 21, 2022. That time, BSE rewarded two bonus shares on existing 1.
BSE Vs NSE Bonus Shares:
BSE's upcoming bonus issue comes after its rival NSE delivered a whopping 4:1 bonus share last year. On November 2, 2024, NSE turned ex-bonus for a 4:1 bonus allotment. The ratio of 4:1 means that NSE distributed 4 new shares on the existing 1 free of cost.
What are bonus issues? Bonus shares are an additional number of shares given by the company to its existing shareholders as "BONUS" when they are not in the position to pay a dividend to its shareholders despite earning decent profits for that quarter. Only a company has the right to issue bonus shares to their shareholders, which have earned massive profits or large free reserves that cannot be utilized for any particular purpose and can be distributed as dividends, as per Nirmal Bang.
Should You Buy BSE Stock?
Jefferies has recommended HOLD on BSE with a target price of Rs 5,250 per share. On Friday, BSE already surpassed its target. However, Jefferies' rationale was due to the latest proposal of Tuesday and Thursday F&O expiry by Sebi. Jefferies believes that the move will likely reduce concerns about BSE's market share losses and EPS impact. Overall, the brokerage expects low impact on BSE.
Meanwhile, as per Trendlyne data, the consensus recommendation from 11 analysts for BSE Ltd. is BUY. Of the total, 2 analysts suggested BUY, while 6 analysts recommended STRONG BUY on BSE. EPS is expected to grow by 57.1% in FY25. The average 1-year target price is at Rs 5652.30 apiece, signalling nearly 6% potential upside.
In its latest research note for BSE, Ventura Securities said, "We expect BSE's revenue to grow at a robust CAGR of 47.7% over FY24-27, supported by higher transaction volumes and an increase in transaction charges from ₹500 to ₹3,250 per ₹10 million turnover. Notwithstanding the hikes, volumes have grown admirably and BSE has gained market share vis a vis NSE. This should have a multiplier impact on revenues. Medium to long term, we expect equity in volume share wrt NSE."
Ventura expects BSE's EBITDA/ net earnings to grow at a CAGR of 80%/ 70.2% to INR 2,287cr/ INR 1,944 cr respectively. EBITDA margins are expected to improve by 2730 bps to 55. As a result, return ratios - RoE and RoIC - are expected to improve by 1712 bps to 27.5% and 2493 bps to 24.9% respectively by FY27E.
On the valuation, Ventura's note said, "We initiate coverage with a BUY rating and a target price of INR 5,422... At 32.1x FY27E P/E, BSE is attractively valued relative to its growth potential. Our financial estimates are significantly convervative considering the recent sharp drawdowns in market volumes. Hence any reversion to mean will result in significant operating leverage. Market share equality with NSE would mean an optionality uside way above our estimates. Key risks: 1)Any regulatory changes affecting derivatives volumes,to competition from NSE and MSEI."
About BSE:
BSE operates as a leading securities exchange, providing a platform for trading in equities, derivatives, debt, and other financial instruments. Its revenue is primarily derived from transaction fees, listing fees, and technology solutions offered to market participants.
Click it and Unblock the Notifications
Sign in with Google