BSE share price has more 25% upside potential, says Sharekhan; here’s why

livemint.com:

BSE share price has jumped more than 360% so far in 2023, giving multibagger returns to investors. The stock surged over 3% to hit a fresh 52-week high of ₹2,595.00 apiece on Monday, extending gains for the seventh straight day. Despite a stellar rally, BSE shares have more than 25% upside potential as the exchange is expected to deliver robust earnings on the back of increasing volumes in equity derivatives, according to brokerage firm Sharekhan.

BSE has been witnessing strong traction in equity derivatives volumes, however volumes are mostly skewed towards the expiry day. Thus, it has currently raised tariffs only on the Sensex 30 running weekly expiry contract. Also Read: BHEL share price may see over 30% upside; Nuvama raises target price “We believe pick up in the volumes in long dated Sensex-30 contract as well as in Bankex gradually would further accelerate volume growth / revenue and aid operating leverage because major investments have been done additionally, clearing charges which are levied would substantially reduce due to higher volumes," said the brokerage firm.

Moreover, BSE is rapidly gaining market share in the derivatives segment. Market share based on premium turnover monthly reached ~4.5% in November, while its expiry day market share is even higher and has been growing much faster. At the operational level, the brokerage expects BSE’s core EBITDA margins to be higher significantly from the current levels once the derivative segment starts to contribute significantly to the top line from FY25E onwards as majority of the fixed cost has already been incurred and variable cost would be minimal.