Neutral BSE; target of Rs 2600: Motilal Oswal

Motilal Oswal's research report on BSE

BSE reported a 1QFY26 operating revenue of ~INR9.6b (in line), up 59% YoY/13% QoQ, mainly driven by 84% YoY growth in transaction charges. Operating expenses stood at INR3.3b, up 4% YoY, led by a 23%/24%/33% YoY growth in regulatory expenses/employee costs/ technology expenses, while clearing house expenses were down 37% YoY. EBITDA stood at INR6.3b, up 122% YoY/29% QoQ, leading to an EBITDA margin of 65.3% vs. our expectations of 59.7% and 46.9% in 1QFY25.

Outlook

We raise our earnings estimates by 7% each for FY26/FY27 to adjust for lower clearing house costs and income from colocation. We reiterate our NEUTRAL rating on the stock with a TP of INR2,600 (premised on 45x FY27E EPS).