The Indian stock market is a buzzing hub where people buy and sell company shares. Companies are raising money by selling shares through IPOs and OFS. In India, there are two stock exchanges, such as the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE is the oldest player in India.
The companies are listed on the BSE to raise funds for growth. The investors are buying shares to grow their wealth. The stock market helps companies grow and investors earn. In this article, what are the diversified segment overviews of BSE Limited? What about its financial health, future plans, turnaround, and key metrics? These are the questions investors must ask to make smart decisions at BSE Limited. Let’s dig in!
Overview Of The Indian Capital Market
The Indian capital market is undergoing significant growth, with benchmark indices such as the BSE Sensex and NSE Nifty50 reaching an all-time high of 82,129.49 and 25,078.30 points, respectively, in recent days. This growth is fueled by strong economic fundamentals and a stable regulatory environment under SEBI’s supervision. Exchanges provide centralized platforms for trading various financial instruments, including equities and derivatives.
Indian Capital Market has 3 stock exchanges in the Equity Cash, Equity derivatives, and Currency Derivatives Segment and 4 in the Commodities Derivatives Segment, 4 clearing corporations, 2 depositories, 11,211 foreign portfolio investors (FPIs), and 17 custodians, with a market capitalization of all listed companies at ₹387 trillion.
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Company Overview Of BSE Limited
BSE Limited was formerly known as the Bombay Stock Exchange. It is Asia’s first and fastest stock exchange in the world, with a speed of 6 microseconds. The company was established in 1875 as ‘The Native Share & Stock Brokers Association. BSE Limited operates a platform for trading equities, debt instruments, derivatives, and mutual funds. The company offers services to participants in the capital market, including risk management, clearing, settlement, market data services, and educational services.
The exchange is headquartered in Mumbai, India, and provides a trading platform for 5,198 listed companies. It is the world’s largest stock exchange in terms of the number of companies listed. BSE Limited is in the 7th rank by market capitalization among global stock exchanges, with a total market capitalization of ₹386 lakh crores as of March 31, 2024.
BSE Limited owns and operates a stock exchange platform. Its subsidiaries include the Indian Clearing Corporation Limited and BSE Institute Ltd, which provide capital market education. Additionally, BSE launched BSE Sammaan, a CSR initiative connecting corporations with verified NGOs. The BSE SENSEX index is India’s most tracked stock market benchmark and is traded internationally on major exchanges such as EUREX and the exchanges of the BRCS nations (Brazil, Russia, China, and South Africa).
BSE Limited’s Diversified Lines of Portfolio
Business Operation Review
Membership: BSE is receiving 46 deposit-based membership (DBM) applications in FY24. Since April 2010, the total number of DBM applications has reached 1,070 as of March 31, 2024.
Corporate Services (Listing): BSE is achieving revenue growth in corporate services, with listing fees for equity, debt, and mutual funds rising 15% to ₹204 crore. Other corporate services earnings are increasing by 14% to ₹48 crore, driven by IPOs, right issues, and other issues.
Data Information Products: The company’s partnership with Deutsche Borse is enhancing international market data sales. Revenue from market data products is increasing from ₹38.86 crore to ₹43.14 crore in FY24, boosted by an increase in domestic and international customer growth and pricing revisions.
Index: Asia Index Private Limited’s revenue is growing by 21%, from ₹55.07 crore to ₹64.43 crore in FY24. The company’s profit rose 31% to ₹20.47 crore. There is increased demand for data subscriptions for indices like S&P BSE 500, S&P BSE SENSEX, and S&P BSE BANKEX.
BSE Turnaround With SENSEX, BANKEX Boost
After 1992, the government’s promotion of the NSE significantly impacted the BSE’s trading volumes. Consequently, BSE’s profitability began declining, affecting its stock price. Initially trading at ₹1,200, BSE’s stock eventually plummeted to ₹510. However, BSE is now witnessing a remarkable turnaround. The introduction of BANKEX and SENSEX expiries is restoring interest in the exchange.
As a result, BSE’s stock price is recovering, currently trading at ₹2,100. Moreover, the F&O boom is further boosting BSE’s revenues. Traders are increasingly participating in these new offerings. Consequently, BSE is experiencing a surge in transaction fees and market data revenues. This growth is translating into improved profitability for the exchange. Therefore, BSE is regaining its competitive edge in the Indian stock market landscape.
Financial Analysis Of BSE Limited
In the financial analysis of BSE Limited, the company’s revenue has increased over the last five consecutive financial years. The revenue has risen from ₹924.84 crore in FY23 to ₹1592.5 crore in FY24, which has grown by 72.19%. The company’s revenue mainly comes from securities services of ₹948.58 crore, services to corporations of ₹349.68 crore, data dissemination fees of ₹43.14 crore, a training institute of ₹19.09 crore, and IT services of ₹29.54 crore. The company’s revenue growth has had a compound annual growth rate (CAGR) of 27.17% for the last four years.
BSE Limited’s net profit has grown over the last 3 years in FY22. It has dropped in FY23. The net profit has increased from ₹205.65 crore in FY23 to ₹771.66 crore in FY24, which has been boosted by 275.23%. The company’s net profit growth has had a CAGR of 58.93% over the last four years.
BSE Limited’s operating profit margin has improved from 35.21% in FY23 to 63.92% in FY24. Furthermore, it has improved from 25.75% to 63.92% over the last 5 years. The net profit margin of the company has risen from 21.56% to 47.70% in FY24. BSE Limited’s ROE and ROCE were 15.20% and 16.20%, respectively, in FY24. BSE Limited is a debt-free company. It has zero net borrowing on the balance sheet in FY24.
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Future Plans Of BSE Limited
- BSE plans to introduce more index derivative products beyond SENSEX and Bankex as they stabilize, with a focus on deepening and broadening the market.
- BSE plans to launch StAR MF 2.0 in Q2 FY 2025, improving scalability, functionality, and order processing for its mutual fund distribution segment.
- BSE is working on measures like Limit Price Protection (LPP) to improve product stability and reduce volatility-related issues in its derivatives segment.
- BSE has completed Phase 1 of its data centre expansion. The company is planning to add 150 more racks based on market demand, with further expansion possible if needed.
- BSE is continuously upgrading its technological infrastructure to provide faster and more efficient trading platforms. The exchange plans to adopt cutting-edge technologies like AI, ML, and blockchain to enhance its services and maintain its competitive edge.
- BSE is working to improve its India International Exchange (India INX) at GIFT City. It is looking for ways to boost trading volumes and make the exchange more competitive.
- BSE will start offering single-stock derivatives on July 1, 2024. These contracts will now expire on the second Thursday of each month instead of the last Thursday.
- BSE is in discussions with S&P Dow Jones Indices about selling its share in Asia Index Private Limited. This move could create new chances in the index market.
Financial Metrics Of BSE Limited
Some of the key financial indicators of BSE Limited are given below.
Target Price
- Jefferies maintained a hold rating on BSE Limited and announced the target price of ₹3000. According to Jefferies, the company’s medium-term outlook remains healthy, and the near-term triggers are limited.
- Investec has given BSE Limited a target price of ₹3400. According to Investec, the company has strong volume growth in equity derivatives and an increase in revenue in data dissemination fees as well.
- Motilal Oswal has announced the target price of BSE Limited will be ₹2700. According to Motilal, the BSE reported a strong performance in 1QFY25 with a PAT of INR2.64 billion, an increase of 160% YoY and 148% QoQ, which beat the estimate of 6.5%.
Conclusion
In conclusion, BSE Limited is successfully navigating a significant turnaround, demonstrating improved financial strength and segment performance. The company’s strategic initiatives are driving strong revenue growth, particularly in its core segments like securities services and data dissemination.
With a solid financial foundation, BSE is regaining investor confidence and enhancing its competitive position in the market. The company’s focus on innovation and expansion in key areas is paving the way for sustained growth, making BSE a promising player in the Indian stock market landscape. What do you think about BSE Limited? Let us know in the comments below.
Written By NIkhil Naik
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