Nomura has initiated coverage with neutral rating on the BSE and set a target price of Rs 1,000, implying a potential upside of 9 percent.
Global brokerage house Nomura has initiated coverage with neutral rating on the BSE, the country's oldest exchange and set a target price of Rs 1,000 per share, implying a potential upside of 9 percent.
The exchange has been monetising/diversifying its franchise model but losing the core battle, the research house said, adding large part of BSE's business value is driven by non-core segment.
Nomura said high earnings before interest and tax (EBIT) growth is led by transaction revenues from highly volatile illiquid segment.
The research house refrained from giving higher multiple to unsustainable/volatile portion of the exchange.
Dependence on investment income is reducing and operational costs are stable for the exchange, it said while expecting revenue/EBIT/PBT CAGR of 4 /11 / 14 percent over FY17-20.
According to the research house, EBIT margin is expected to improve to 30 percent by FY20.
The BSE has reported a 30 percent growth year-on-year in profit at Rs 66.83 crore and 21.8 percent growth in revenue at Rs 110.75 crore.At 12:28 hours IST, the stock price was quoting at Rs 922.35, up Rs 8.50, or 0.93 percent on the BSE.