BSE+-+initiating+coverage-Jan-25-NUVAMA

January 2025
Ini a ng Coverage
BSE LIMITED
Rising Star: Throwing down the gauntlet
Madhukar.Ladha Mahrukh Adajania

Madhukar.Ladha@nuvama.com Mahrukh.Adajania@nuvama.com
Nuvama Institutional Equities

India Equity Research Other financial services January 14, 2025
BSE
INITIATING COVERAGE
KEY DATA
Rating BUY
Rising Star: Throwing down the gauntlet
Sector relative Neutral
Price (INR) 5,157
12 month price target (INR) 6,730 BSE—Asia’s oldest stock exchange—is highly adaptive and shall thrive
52 Week High/Low
Market cap (INR bn/USD bn)
5,838/1,941
698/8.1
despite tighter index derivatives regulation. Think fast and slow—fast
Free float (%) 100.0 picture: discontinued weekly contracts make up 21.3% of its ADPTV;
Avg. daily value traded (INR mn) 13,490.3
the slow one: immense scope to grow customer base (merely 1.5–2mn
currently). Plus, higher contract sizes shall reduce clearing charges,
SHAREHOLDING PATTERN thereby lifting EBITDA margin. Longer term, diverse revenue streams
Sep-24 Jun-24 Mar-24 (StAR MF, AIPL, colocation services) shall amplify growth potential.
Promoter 13.01% 11.12% 13.04%
FII 11.68% 11.60% 12.69%
Even after building in the hit from regulatory changes, we forecast BSE
DII 52.40% 54.52% 51.91% shall turn in an FY24–27E revenue/APAT CAGR of 39.9%/70.8%, lifting
Pledge - - - its RoE to 37.9%. Initiate at ‘BUY’ with a TP of INR6,730 based on FY27E
PE of 50x (given duopolistic industry) plus the value of its stake in CDSL.
FINANCIALS (INR mn) Beyond noise: Derivatives to scale up despite regulatory tightening
Year to March FY24A FY25E FY26E FY27E
We believe BSE is better equipped to face the impact of changes in market structure
Revenue 13,900 27,558 32,904 38,053
EBITDA 3,997 13,785 18,702 21,914
brought about by SEBI’s Nov-24 circular reforming the index derivatives market. We
Adjusted profit 3,484 11,124 14,902 17,367 argue BSE can continue to grow index option volumes considering that discontinued
Diluted EPS (INR) 25.4 81.0 108.5 126.5 contracts comprise only 21.3% of its index option premium volumes (ADPTVs) versus
EPS growth (%) 107.1 219.3 34.0 16.5 NSE’s 46.9%. The full force of the impact shall only be known after all changes—
RoAE (%) 11.6 31.7 37.4 38.0
increased lot sizes and margin requirements—kick in by Jan-25. Moreover, BSE has
P/E (x) 187.6 58.8 43.9 37.6
EV/EBITDA (x) 288.0 65.9 47.2 40.0
room to expand its derivatives active customer base—currently 1.5mn–2mn
Dividend yield (%) 0.3 1.2 1.6 1.9 (monthly) versus NSE’s 4.2mn. In all, we estimate BSE’s equity index option ADPTV
market share shall burgeon to 14.9% in FY27E from 3.1% in FY24 (already 11.9% in
Nov-24). BSE has hiked transaction charges from INR500 per INR10mn to INR3,250.
Growing volumes along with higher transaction charges are likely to fire FY24–27E
PRICE PERFORMANCE
transaction charges CAGR of 69.9%.
5,800 86,000
5,030 82,800 A nuanced trade: Lower clearing charges to send margins soaring
4,260 79,600
3,490 76,400
We reckon increased contract sizes shall not have a significant impact on BSE’s
2,720 73,200 ADPTV as its average number of contracts traded/order is five. That said, we expect
1,950 70,000 higher contract sizes to result in lower clearing charges as clearing charges are
Jan-24 Apr-24 Jul-24 Oct-24
BSE IN EQUITY Sensex
calculated on the number of contracts cleared, which is likely to reduce. Hence,
clearing charges shall drop from INR2,013 per INR10mn of premium turnover in FY24
to INR734 by FY26E, contributing to EBITDA margin expansion over FY24–27E.
Robust structure: Multiple streams to propel revenue growth

BSE’s diverse revenue streams include its dominant StAR MF platform, which had a
market share of ~85% in FY24 and clocked 63% YoY growth in MF revenue. We
forecast StAR MF’s revenue shall expand at a 30.9% CAGR to INR2.9bn over FY24–
27E. Moreover, we estimate improved revenue contribution from Asia Index Private
Limited (AIPL) and BSE’s colocation facility.
Key risks for the company include: i) any adverse regulatory changes; ii) over-
dependence on equity index options segment; iii) any large-scale macroeconomic
slowdown; and iv) technology infrastructure or security risks.
Madhukar Ladha Mahrukh Adajania

madhukar.ladha@nuvama.com mahrukh.adajania@nuvama.com
Nuvama Research is also available on www.nuvamaresearch.com, Bloomberg - NUVA, Thomson Reuters, and Factset Nuvama Institutional Equities
BSE
Executive Summary
Established in 1875 on Dalal Street in Mumbai, BSE Ltd (formerly Bombay Stock
Exchange) is the oldest stock exchange of Asia. The stock exchange provides
investors a trading platform to purchase and sell equity and fixed-income securities
listed on the stock exchange. BSE provides an efficient and transparent market for
trading in equity, currencies, debt instruments, derivatives and mutual funds. Indian
Clearing Corporation Ltd—a wholly-owned subsidiary of BSE—acts as the central
counterparty to all trades executed on the BSE trading platform.
BSE SME is India’s largest SME platform with over 480 companies listed and
continues to grow at a steady pace. BSE StAR MF is India’s largest online mutual fund
platform, which processed over 420mn transactions and added 27.1mn new SIPs in
FY24. The company has a diversified revenue stream comprising transaction
charges, listing services, treasury income, index services, data feed and others.
“I want to make BSE a vibrant place. In

Regulatory measures to have limited impact on BSE’s growth
my opinion, concentration in anything is BSE is likely to be less hurt by a reduction in weekly contract volumes as discontinued
not good especially for a country of weekly contracts comprise 21.3% of its index option premium volumes compared
India’s size and structure, and it is better with NSE’s 46.9%. The complete extent of the impact shall only be known after all
to have more than one infrastructure
changes—increased lot sizes and margin requirements—kick in by Jan-25.
intermediary.”
We believe BSE has room to grow its derivative active customer base, which is at
— Mr Sundararaman
Ramamurthy 1.5mn–2mn (monthly) versus NSE’s 4.2mn; moreover, given that only one expiry day
per week per exchange is now allowed, it is possible that at least part of the investor
MD & CEO
base at NSE also starts trading on the BSE.
We forecast BSE’s equity index option average daily premium turnover (ADPTV)
market share shall improve from 3.1% in FY24 to 14.9% in FY27E; currently the same
stands at 11.9% in Nov-24. The company has increased transaction charges to
INR3,250 per INR10mn from INR500. Growing volumes along with increased
transaction charge are likely to result in strong growth in transaction charges.
Driven by new product offerings in the equity index options segment, BSE’s
transaction revenue has grown significantly at an FY20–24 CAGR of 50.7% to
INR5.8bn in FY24. We estimate transaction charges shall burgeon at a CAGR of 62.3%
to INR24.9bn over FY24–27E.
Lower clearing charges likely to drive margin improvement

We reckon increased contract sizes shall not have a significant impact on BSE’s
volumes as the average number of contracts traded per order is five; furthermore,
we anticipate increased contract sizes to likely result in reduced clearing charges
given that clearing charges are dependent on the number of contracts cleared,
which is likely to reduce. We build in a reduction in clearing charges from of INR2,013
per INR10mn of premium turnover in FY24 to INR734 by FY26E. This is likely to
trigger EBITDA margin expansion from 28.8% in FY24 to 57.6% in FY27E.
Diverse revenue streams to fuel revenue growth

BSE’s diverse revenue streams include its dominant StAR MF platform, which had a
market share of ~85% in FY24 and clocked 63% YoY revenue growth. We forecast
StAR MF’s revenue shall increase at a 30.9% CAGR to INR2.9bn over FY24–27E.
Moreover, we estimate improved revenue contribution from AIPL with new indices
offerings and improved data subscription revenue. BSE’s colocation facility is likely
to add new revenue stream as volumes build up and the company starts charging
for order throughput and market data feed.
2 Nuvama Research is also available on www.nuvamaresearch.com, Bloomberg - NUVA, Thomson Reuters, and Factset Nuvama Institutional Equities
BSE
Financial outlook
Transaction revenue is likely to increase at a blistering CAGR of 69.9% over FY24–
27E to INR22bn, contributing 58% to total revenue. We anticipate BSE to sustain
strong revenue growth despite near-term regulatory changes, with an estimated
operating revenue CAGR of 39.9% over FY24–27E. Alongside, we forecast EBITDA
margin shall improve 2,879bp from FY24 to 57.6% by FY27E, driving an EBITDA CAGR
of 76.3% over FY24–27E. APAT margin is likely to jump 2,055bp over FY24’s to 45.6%
by FY27E. We forecast RoE would expand to 37.9% by FY27 from the current 11.6%.
Valuation
We are initiating coverage on BSE with a ‘BUY’ and TP of INR6,730 based on target
PE of 50x FY27E EPS plus value of its stake in CDSL. We believe a 50x PE for the
company is apt given duopolistic nature of the industry, and relative valuation of
Indian capital market infrastructure plays such as CDSL, KFINTECH, MCX and CAMS.
We add the value of CDSL to our TP of INR1,740, valuing CDSL at a market
capitalisation of INR363.6bn. BSE owns a 15% stake in CDSL, implying the value of
stake at INR54.5bn and contributing 5.9% to our TP.
Our TP implies upside potential of 30%. At the CMP of INR5,157, the stock is trading
at FY26E/27E P/E of 43.9x/37.6x and EV/NOPLAT of 47.2x/40.0x.
Key risks
 Any change in regulations or any adverse regulatory actions can have a material
impact on the business and may result in earnings volatility.
 Dependence on index options in derivative segment.
 Any large-scale macroeconomic slowdown may affect capital market sentiment,

hurting trading volumes and revenue.
 Technological infrastructure or security failure may result in a loss of credibility

and/or additional regulatory penalties on the exchange.
 Failure to obtain regulatory approvals required for operations may result in

penalties by SEBI.
 Competition risk arising from the launch and success of new exchange/s.
 BSE’s operating investment investments are exposed to interest rate risk.
Nuvama Research is also available on www.nuvamaresearch.com, Bloomberg - NUVA, Thomson Reuters, and Factset Nuvama Institutional Equities 3
BSE
The Story in Charts

BSE to gain market share in index options ADPTV Transaction charges: FY24–27E CAGR at 69.9%
14.9 14.9 25
15
22.0
12 11.4 20 18.6
15.5
9 15
(INR bn)
(%)
6 10
3.1 4.5
3 5
1.6
0 0
FY24 FY25E FY26E FY27E FY23 FY24 FY25E FY26E FY27E
Transaction charges revenue share to dominate Revenue likely to rise at 39.9% CAGR over FY24–27E
100 6.3 5.9 5.7 40 98.3 100.0
9.4 2.5 2.4 2.4
3.1 2.7 2.7 2.4
3.4 12.2 12.6 12.8 38.0
80
20.2 3.7 4.5 4.5 32 80.0
8.3 7.9 7.5 33.1
60 9.1 8.2 7.4 6.7 70.4
27.8
(%)
9.2 24 60.0
(INR bn)
40 13.2
56.2 56.5 57.9 16 40.0
20
32.3
8.2 13.9
0 8 19.4 20.0
15.7
FY24 FY25E FY26E FY27E 9.7
Transaction Charges Treasury Income 0 0.0
MF revenue C&S Charges FY23 FY24 FY25E FY26E FY27E
Listing Fees Book Building Revenue (INR bn) YoY growth (%)
EBIT FY24–27E CAGR: 88.3% APAT FY24–27E CAGR at 70.8% with RoE at 30%-plus
25 60 20 40
37.6 37.9
53.1 53.4
20 48 16 32.1 17.3 32
46.3 20.3
15.0
15 17.5 36 12 24
(INR bn)
(INR bn)
(%)
(%)
11.3
12.9 8 16
10 24
21.9
11.6
16.8
4 8
5 12 6.3
1.7 3.5
1.4 3.0 0 0
0 0
FY23 FY24 FY25E FY26E FY27E
EBIT (INR bn) EBIT margin (%) APAT (INR bn) RoE (%)
Source: Company, NSE, Nuvama Research
BSE
Financial Statements
Income Statement (INR mn) Balance Sheet (INR mn)
Year to March FY24A FY25E FY26E FY27E Year to March FY24A FY25E FY26E FY27E
Total operating income 13,900 27,558 32,904 38,053 Share capital 271 271 271 271
Gross profit 0 0 0 0 Reserves 32,752 36,931 42,318 48,616
Employee costs 2,047 2,365 2,649 2,914 Shareholders funds 33,023 37,202 42,589 48,887
Other expenses 7,856 11,408 11,553 13,225 Minority interest 1,524 1,474 1,429 1,388
EBITDA 3,997 13,785 18,702 21,914 Borrowings 9,576 10,616 11,779 13,080
Depreciation 954 1,149 1,313 1,558 Trade payables 1,906 2,643 3,155 3,649
Less: Interest expense 151 0 0 0 Other liabs & prov 48,364 56,107 60,800 65,539
Add: Other income 2,279 2,201 2,424 2,753 Total liabilities 94,502 108,159 119,881 132,683
Profit before tax 5,171 14,837 19,812 23,109 Net block 1,991 2,513 2,595 2,751
Prov for tax 1,847 3,798 4,993 5,823 Intangible assets 862 1,396 1,645 1,834
Less: Other adj 4,300 842 917 1,088 Capital WIP 145 158 172 187
Reported profit 7,784 11,965 15,819 18,455 Total fixed assets 2,998 4,067 4,413 4,772
Less: Excp.item (net) 4,300 842 917 1,088 Non current inv 11,522 11,252 11,003 10,772
Adjusted profit 3,484 11,124 14,902 17,367 Cash/cash equivalent 44,629 60,059 68,411 76,552
Diluted shares o/s 137 137 137 137 Sundry debtors 2,109 3,024 4,335 6,216
Adjusted diluted EPS 25.4 81.0 108.5 126.5 Loans & advances 550 577 606 636
DPS (INR) 15.0 56.7 76.0 88.5 Other assets 13,000 12,924 12,882 12,872
Tax rate (%) 35.7 25.6 25.2 25.2 Total assets 94,502 108,159 119,881 132,683
Important Ratios (%) Free Cash Flow (INR mn)

Cash ADTV growth (YoY %) 60.3 21.7 10.6 14.8 Reported profit 7,784 11,965 15,819 18,455
Index options ADPTV 0 288.9 20.3 20.0 Add: Depreciation 954 1,149 1,313 1,558
growth ( YoY %) Interest (net of tax) 151 0 0 0
Index options ADPTV 3.1 11.4 14.9 14.9 Others (6,739) (3,127) (3,423) (3,923)
mkt share ( %)
Less: Changes in WC 16,602 12,054 3,090 2,028
EBITDA margin (%) 28.8 50.0 56.8 57.6
Operating cash flow 18,752 22,040 16,799 18,118
Net profit margin (%) 25.1 40.4 45.3 45.6
Less: Capex (1,410) (2,217) (1,659) (1,918)
Revenue growth (% YoY) 70.4 98.3 19.4 15.7
Free cash flow 17,342 19,823 15,140 16,200
EBITDA growth (% YoY) 102.4 244.9 35.7 17.2
Adj. profit growth (%) 107.0 219.3 34.0 16.5
Assumptions (%) Key Ratios

GDP (YoY %) 6.7 6.0 6.2 7.0 RoE (%) 11.6 31.7 37.4 38.0
Repo rate (%) 6.5 6.0 5.0 5.0 RoCE (%) 11.5 40.3 48.1 48.5
USD/INR (average) 83.0 84.0 82.0 81.0 Inventory days 0 0 0 0
Core Op. Profit (INR mn) 2,892.1 12,636.4 17,388.5 20,355.5 Receivable days 55 40 48 60
NOPLAT (INR mn) 2,163.3 9,401.5 13,006.6 15,225.9 Payable days 50 35 35 35
NOPLAT YoY growth (%) 163.8 334.6 38.3 17.1 Working cap (% sales) (253.2) (155.2) (141.8) (131.3)
Trans. chgs growth (%) 124.7 164.9 20.8 17.3 Gross debt/equity (x) 0 0 0 0
Corporate services (%) 20.4 26.0 21.8 14.5 Net debt/equity (x) (1.0) (1.0) (1.0) (1.0)
Treasury inc. growth (%) 85.2 (4.5) 10.8 14.7 Interest coverage (x) 20.2 0 0 0
Valuation Metrics Valuation Drivers

Diluted P/E (x) 187.6 58.8 43.9 37.6 EPS growth (%) 107.1 219.3 34.0 16.5
Price/BV (x) 22.3 19.5 16.8 14.5 RoE (%) 11.6 31.7 37.4 38.0
EV/EBITDA (x) 288.0 65.9 47.2 40.0 EBITDA growth (%) 102.4 244.9 35.7 17.2
Dividend yield (%) 0.3 1.2 1.6 1.9 Payout ratio (%) 59.1 70.0 70.0 70.0
Source: Company and Nuvama estimates
BSE
Investment Rationale
 BSE is likely to be less hurt by a reduction in weekly contract volumes as
discontinued contracts are 21.3% of its index option premium volumes in year
to FY25 versus NSE’s 46.9%. The complete impact shall only be known after all
changes—higher lot sizes and margin requirements kick in, in Jan-25.
 We believe BSE has room to grow its derivative active customer base, which is
at 1.5mn–2mn (monthly) in Nov-24 versus NSE’s 4.2mn; moreover, given that
only one expiry day per week per exchange is now allowed, it is possible that at
least part of the investor base at NSE also starts trading on the BSE.
 BSE’s equity index option ADPTV market share to improve to 14.9% in FY27E
from 3.1% in FY24; its equity index ADPTV market share has already risen to
11.9% in Nov-24. BSE has hiked transaction charges to INR3,250/INR10mn from
INR500. Growing volumes along with increased transaction charges are likely to
result in strong growth in transaction charges.
 We reckon higher contract sizes are unlikely to hurt BSE’s volumes materially as
average number of contracts traded/order is five; moreover, we expect higher
contract sizes to lower clearing charges. We build in a fall in clearing charges
from INR2,013/INR10mn of premium turnover in FY24 to INR734 by FY26E. This
is likely to result in EBITDA margin expansion to 57.6% in FY27E from 28.8% in
FY24.
 Other revenue drivers include StAR MF, AIPL and growth in colocation charges.
BSE to face limited impact of changed index derivative regulations

From November 20, 2024, SEBI has introduced several measures to strengthen the
equity index derivatives framework, safeguard the interest of retail investors, and to
put a check on the surge in trading in equity index options near expiry time periods.
Key changes include:
Rationalisation of weekly index derivatives products and increase in lot sizes
SEBI has decided to rationalise index derivatives products offered by exchanges,

which expire on a weekly basis. Beginning November 20,2024, each exchange may
provide derivatives contracts for only one of its benchmark index with weekly expiry.
This has been done to address the issue of excessive trading in index derivatives on
expiry days. Moreover, SEBI has directed an increase in lot size of index derivatives
to be fixed in such a manner that the contract value of the derivative on the day of
review is within INR1.5mn–INR2mn. This was earlier set at INR0.5mn–INR1mn.
As a result of these changes, NSE and BSE had to reduce their offerings and also
increase contract sizes. While we do forecast some reduction in volumes, we also
estimate some shift in volumes from one contract to the other at and near expiry
and investors becoming more active on both exchanges at and near expiries as only
limited days of the week are set to be expiry days and available to trade.
BSE
NSE’s index options expiry days changed from Monday–Friday to Thursday with increase in lot sizes
Underlying Period Old expiry New expiry Lot size Expiry Date
Last expiry date New contracts First expiry date
Old New
with existing lot size available from with revised lot size
Quarterly,
Semi- Last Thursday of month Last Thursday of month 25 75 26-Dec-24 26-Dec-24 27-Mar-25*
Nifty annual
Monthly Last Thursday of month Last Thursday of month 25 75 30-Jan-25 28-Nov-24 27-Feb-25
Weekly Thursdays Thursday every week 25 75 19-Dec-24 28-Nov-24 2-Jan-25
Last Wednesday of
Quarterly Last Thursday of month 15 30 24-Dec-24 24-Dec-24 26-Mar-25**
expiry month
Bank Nifty Last Wednesday of
Monthly Last Thursday of month 15 30 29-Jan-25 27-Nov-25 26-Feb-25
expiry month
Weekly Wednesdays Contract disallowed 15 NA 13-Nov-24 NA NA
Last Tuesday of expiry
FINNIFTY month
Weekly Every Tuesday Contract disallowed 25 NA 18-Nov-24 NA NA
Last Monday of expiry
MIDCPNIFTY month
Weekly Mondays Contract disallowed 50 NA 19-Nov-24 NA NA
Last Friday of expiry
NIFTYNXT50 month
Weekly Fridays Contract disallowed 10 NA 22-Nov-25 NA NA
Source: NSE, Nuvama Research
Notes: *Will be revised from 26-Dec-24
**Will be revised from 24-Dec-24
Mar-25 contracts introduced as quarterly contracts; to become far month contract of respective index derivative on Dec-24 monthly expiry day (EoD)
BSE’s index options expiry days changed from Friday and Monday to Tuesday with increase in lot size
Underlying Period Old expiry New expiry Lot size Expiry Date
Last expiry date
New contracts First expiry date
Old New with existing lot
available from with revised lot size
size
Quarterly,
Last Friday of month Last Tuesday of month 10 20 27-Dec-24 27-Dec-24 28-Mar-25*
Semi-annual
Sensex Monthly Last Friday of month Last Tuesday of month 10 20 31-Jan-25 29-Nov-24 28-Feb-25
Weekly Fridays Tuesdays 10 20 3-Jan-25 6-Dec-24 10-Jan-25
Last Monday of expiry
Monthly Last Tuesday of month 15 30 27-Jan-25 25-Nov-24 24-Feb-25
Bankex month
Weekly Mondays Contract disallowed 15 NA 18-Nov-24 NA NA
Last Thursday of expiry
Monthly Last Tuesday of month 25 60 30-Jan-25 28-Nov-25 27-Feb-25
SENSEX50 month
Weekly Thursdays Contract disallowed 25 NA 14-Nov-24 NA NA
Source: BSE, Nuvama Research
Note: *Lot size to change on 27-Dec-24
Moreover, SEBI has also removed calendar spread treatment on expiry day i.e. the
benefit of offsetting positions across different expiries (calendar spread) shall not be
available on the day of expiry for contracts expiring on that day, thereby resulting in
increased margin requirements. Lastly, SEBI has required exchanges to monitor
intra-day position limits.
We believe these measures shall strengthen the industry in the longer term although
in the short term these measures may result in an adverse impact on volumes.
BSE
Weekly expiries drive large share in volumes
We estimate that during FY25TD (Apr-24–Oct-24) weekly equity index option

contracts contributed to 73.1% total equity index option premium turnover while
the same is 77.5% for BSE. Given that only benchmark contracts are now allowed to
have weekly expiries, weekly volumes of other contracts that have been
discontinued are potentially at a risk of reduction. Volume at risk is lower for BSE at
21.3% versus NSE at 46.9%. Furthermore, trading volumes of monthly contracts are
also likely to reduce given that expiry day has been consolidated to just one day per
week per exchange. Given BSE is still in a growth phase, we believe it shall face lower
impact of these measures.
NSE’s discontinued contracts form 46.9% of premium T/V in FY25TD
40
35.1 NSE premium T/V (%)
32
26.1
24
(%)
16 12.5
10.7
8.3
8
3.6 2.7
1.1
0
Monthly Weekly Monthly Weekly Monthly Weekly Monthly Weekly
BANKNIFTY NIFTY MIDCPNIFTY FINNIFTY
Note: For contracts expiring during Apr-24 to Oct-24
BSE’s discontinued contracts form 21.3% of premium T/V in FY25TD

60 56.2
BSE Premium T/V (%)
48
36
(%)
24 21.3
14.9
12 7.6
0
Monthly Weekly Monthly Weekly
BANKEX SENSEX
On the NSE, equity index option contracts trading is more prevalent on non-expiry
days compared with contracts that get traded on the BSE. Only ~30% of premium
turnover is traded on expiry day for the Nifty 50 options, whereas 84.1% of total
premium is traded on expiry day for Sensex options.
BSE
On NSE, expiry day premium turnover share at ~30%
50
40
32.4
30
30.0
(%)
20 18.5 15.8 15.4
12.2
10 14.1 14.1 2.6 5.5

12.4 12.5 11.0
3.5
0
0DTE 1DTE 2DTE 3DTE 4DTE 5DTE 5+DTE
BANKNIFTY NIFTY
On BSE, expiry day premium turnover share at more than 80%
100 91.5
84.1 Premium turnover (%)
80
60
40
20
8.6
1.6 3.5 4.0 2.1 2.9 1.5 2.3
0.5 0.8 0.2 0.5
0
0DTE 1DTE 2DTE 3DTE 4DTE 5DTE 5+DTE
BANKEX SENSEX
Depth in NSE’s traded equity index option volumes is also exhibited by the fact that
a large percentage (20%-plus) of Nifty index option volumes are traded about a
month i.e. 15–35 days to expiry bucket.
BSE
NSE depth with 20%-plus premium T/V over 15–35 days to expiry bucket
60
Premium T/V (%)
48 44.5
35.6
36
(%)
26.6
24
25.3 17.2 15.3
10.3
12 6.4 7.0
3.9 5.1
2.1
0.1 0.6
0
0DTE 1DTE 2-7DTE 8-15DTE 16-35DTE 36-65DTE 65+DTE
BANKNIFTY NIFTY
Source: Company, Nuvama Research
BSE’s derivative active clients has room to grow
As of Sep-24, BSE had 5.6mn activated accounts on the derivatives segment. NSE’s
annual reported derivative segment active customers is 9.2mn, whereas derivative
segment monthly active customers is ~4.2mn as of Nov-24. We understand from
discussions with the company that monthly active customers for the BSE is still in
the range of 1.5mn–2mn. Given NSE now offers only a single expiry a day traders
may move to BSE. BSE has also moved expiry to Tuesday so as to have a clear three
trading days from NSE’s Thursday.
Early trend indicates BSE continues to hold on and grow volumes

Change in equity index options
NSE BSE
Week ended ADTV (%) ADPTV (%) ADTV (%) ADPTV (%)
6-Dec-24 (43.0) (6.5) (22.7) 14.7
13-Dec-24 (53.8) (32.1) (10.2) 37.7
20-Dec-24 (69.3) (29.6) (89.1) (45.5)
27-Dec-24 (32.6) (33.4) (12.0) (2.2)
3-Jan-25 (39.2) (18.8) 23.2 58.2
10-Jan-25 (45.1) (17.3) 7.7 61.4
Note: Change with respect to last five-week average (11th Oct- 8th Nov) before
implementation of SEBI’s circular on changes in equity index derivatives dt. 01/10/2024
Premium to notional turnover ratio set to improve
The above-mentioned changes are likely to result in an improvement in long dated

contract volumes; this in turn is likely to result in increased premium to notional
turnover ratio for BSE.
BSE
BSE’s monthly premium to notional turnover considerably lower than NSE

Premium turnover to notional turnover
25 22.7 22.9 23.0
21.8
20.8 20.3
19.1 18.7 19.0 19.1
20 18.1 17.9 17.7 17.7 17.7 17.1
16.9 16.3 15.9
15 12.7
(bps)
10 7.5 6.9 7.0 6.9 7.2 7.8 7.5 7.7

5.8 6.4 6.5 6.5 6.1 6.7
5.4 5.6 5.1 5.7
5
0
May-23 Aug-23 Nov-23 Feb-24 May-24 Aug-24 Nov-24
NSE BSE
Source: NSE, BSE, Nuvama Research
Transaction charges to play pivotal role in revenue growth
During FY20–24, transaction charges revenue expanded at a CAGR of 50.7% to

INR5.8bn in FY24. The surge is attributable to new product offerings in the derivative
segment. Equity cash was a major driver for transaction revenue contributing 66.5%
in FY22, but with new derivative offerings, which were introduced in May-23, the
cash segment now contributes only 36.6% of transaction revenue in FY24 while
equity derivative contributed 24.9% in FY24.
BSE’s operating revenue grows at FY20–24 CAGR of 32.5%
15 200
155.4
12 160
9 120
(INR bn)
(%)
70.4
6 80
48.2
3 9.7 40
0.0 11.3
4.5 5.0 7.4 8.2 13.9 13.5
0 0
FY20 FY21 FY22 FY23 FY24 H1FY25
Revenue (LHS) Growth (RHS)

BSE
Transaction charges for BSE/NSE grow 141.6%/19.1% YoY in FY24
150
120
90
(INR bn)
60 121.2
101.7
69.7 71.8
30
42.4 5.8 9.1
23.91.1 1.4 2.6 2.4
0
FY20 FY21 FY22 FY23 FY24 H1FY25
NSE BSE
BSE’s revenue composition moving from listing to transaction charges

100
13.3 9.1 7.9 10.0 7.1
4.3 6.1 9.1
1.9 6.7 4.8 9.1 3.1
80 7.0 4.8
5.1 6.0 7.4 13.2
10.2
60
38.9 25.5
(%)
47.6 46.2 36.3

40
20 34.8 41.9
25.1 27.7 29.6
0
FY20 FY21 FY22 FY23 FY24
Transaction charges BSE Listing services BSE
Income on investments BSE Data services BSE
Clearing & Settlement Services BSE Others BSE
BSE’s market share in Indian capital markets
Cash equity: Indian cash equity ADTV has grown at a CAGR of 20.8% in FY14–24 to
INR883bn in FY24. During FY25TD, cash ADTV has further increased to INR1.29tn
(+76.1% YoY). During year to FY25, BSE’s market share was 6.7%. We are not building
in a substantial increase in market share for BSE in the cash equities segment.
BSE
BSE has 6.7% market share in cash equity ADTV
1,500 1,470 10
1,278
1,157
1,200 8
7.5 7.5
7.0
817 6.5 6.5 6.5
900 6
(INR bn)
668
(%)
548
600 4
300 2
54 66 81 89 102
41
0 0
FY22 FY23 FY24 FY25E FY26E FY27E
BSE ADTV (LHS) NSE ADTV(LHS) BSE Market share (RHS)

Note: FY25 until Nov-24
Derivatives: Indian equity index futures along with single stock futures and options
segments remains dominated by NSE with BSE holding almost no market share. BSE
however has done well in the equity index options segment.
Indian equity index options average daily premium turnover has grown at a CAGR of
81.3% in FY19–24 to INR638tn in FY24 and now stands at INR759tn in FY25TD (Nov-
24). BSE—which started in this segment just in May-23—has been able to capture a
market share of 11.9% (Nov-24). We reckon some improvement in market share
over the course of FY26 and are then building in stable shares.
BSE gaining MS in options trading post-launch of weekly contracts
Premium turnover market share
100 0.0 0.5 2.3 3.7 4.6 7.2 9.7 9.8 13.3 11.9
80
60
(%)
100.0 99.5 97.7 96.3 95.4 92.8 90.3 90.2 86.7 88.1
40
20
0
Jul-24
Jul-23
May-23
Nov-23
May-24
Nov-24
Sep-23
Jan-24
Mar-24
Sep-24
NSE BSE
BSE
BSE’s equity index option ADPTV market share to improve

15 14.9 14.9
12 11.4
(%)
6
3.1
3
0
FY24 FY25E FY26E FY27E
Lower clearing charges likely to drive up margin

Exchanges pay clearing charges to clearing corporations for settlement of trades.
These charges are paid out of the transaction revenue that exchanges earn from the
transactions executed on the exchange. Charges of clearing corporations are based
on the interoperability agreement between clearing corporations. Clearing charges
are typically based on the number of contracts traded, not on premium value.
We forecast BSE’s operating margins shall expand as a result of SEBI’s new rules,
which result in increased contract sizes. We understand that average volume traded
is at least five contracts. Given that contract sizes are doubling in size beginning Jan-
25, we estimate the number of traded contracts shall reduce. Overall premium
turnover is likely to hold up as we expect minimal loss in volumes due to an increase
in lot sizes as the average order size is five contracts. Elevated margin requirement
may however result in some loss in volumes.
We build in a reduction in clearing and settlement expenses per every 10mn equity
index options turnover to INR734 in FY26E from INR2,013 in FY24. This is likely to aid
EBITDA margin expansion.
Reduction in clearing, settlement charges to drive up EBITDA margin
FY24 FY25E FY26E FY27E
Expense per Cr of options premium turnover (INR) 2,013 1,029 734 734
C&S Expense (INR mn) 2,066 4,090 3,470 4,164
as % of operating revenue 14.9 14.7 10.5 11.0
EBITDA Margin (%) 28.8 50.4 57.0 57.6
BSE
Diverse revenue streams to drive revenue

BSE StAR MF platform: Consistent star performer
BSE StAR MF is a mutual fund distribution platform offered by BSE; it is a technology-
driven platform facilitating buying and selling of mutual fund units, providing an easy
and convenient interface for financial advisors, distributors and investors. BSE StAR
MF dominates with ~85% market share in FY24 in terms of number of transactions
among exchange-based platforms in the mutual fund industry.
The platform continues to showcase an exceptional performance, with volume
(number of orders)/MF revenue CAGR of 63.9%/30.1% during FY20–24. In FY24, it
registered 27.1mn new SIPs, clocking 116% YoY growth. The number of orders in
Q2FY25 surged 68.5% YoY to 163mn while registered investors soared 35.9% YoY to
206mn, both driving MF revenue to INR588mn, up 100% YoY.
Revenue per order surged to INR3.6 in Q2FY25 from INR2.7 in FY22. Deepening MF
penetration through SIP given other macro positives shall drive StAR MF’s growth.
StAR MF orders/revenue to log 24.6%/30.9% CAGR over FY24–27E
3500
2,871
2800 2,610
2,274
2100
(mn)
1,281
1400
786 724 796
639
700 447 504 411
341 265
94 185
57
0
FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY27E
Number of Orders (mn) MF Revenue (INR mn)
Number of investors using StAR MF surges 3x since Q2FY22

250
206
200
165
152
150 133
119
(mn)
100 89
67
50
0
Q2FY22 Q4FY22 Q2FY23 Q4FY23 Q2FY24 Q4FY24 Q2FY25
BSE
BSE purchases controlling stake in Asia Index Private Ltd (AIPL)

S&P Dow Jones Indices (S&P DJI) has sold its 50% stake in Asia Index Pvt Ltd (AIPL)
to BSE, making AIPL a fully-owned subsidiary of BSE. AIPL—the erstwhile joint
venture between BSE and S&P DJI—is widely known for calculating and maintaining
the iconic Sensex index. AIPL launched four new indices, reflecting its ongoing
commitment to innovating and developing products that resonate with investors
and asset managers. New launches include:
BSE Select IPO: This index tracks the performance of newly-listed stocks on the BSE,
including those that have gone public through initial public offerings (IPOs) or spin-
offs/demergers. Stocks are selected based on three key criteria: full market
capitalisation, liquidity and a minimum listing history of three months.
BSE SENSEX Sixty 65:35: A strategy index that combines constituents from both the
BSE SENSEX and BSE SENSEX Next 30 indices; the SENSEX: SENSEX Next 30 indices
are combined in a 65:35 ratio. Given 60 constituents, this index represents over 55%
of the total free float market capitalisation of all listed entities in India. The allocation
ratio provides slightly more weight to the Next 30 constituents compared with the
free float market capitalisation method.
BSE SENSEX Sixty: This index includes the constituents of the BSE SENSEX and the
BSE SENSEX Next 30, ranked by their free float market capitalisation. A USD variant
of the index also exists, namely the BSE SENSEX Sixty USD and BSE SENSEX Sixty
65:35 USD.
BSE Power and Energy: A thematic index that tracks the performance of companies
in the Energy and Utility sectors within the BSE 500 index. This index reflects the
weighted performance of constituents from these sectors.
BSE Internet Economy: The index tracks companies that operate primarily through
digital platforms, focusing on those with business models that are digital-first and
enable or support digital transactions in retail investments and consumption.
BSE capital markets and insurance: The index measures the performance of
companies across the Industry Groups—Capital Market and Insurance, selected
based on free-float market capitalisation from the BSE 500 Index.
These new indices are designed to support passive investment strategies, including
exchange-traded funds (ETFs) and index funds as well as to gauge the performance
of emerging companies across major sectors in India. They also serve as benchmarks
for portfolio management services (PMS), mutual fund schemes and fund portfolios.
FY24 also experienced a surge in demand for data subscriptions, particularly for
indices such as the S&P BSE 500, S&P BSE BANKEX and S&P BSE SENSEX.
AIPL’s total revenue expanded 17% YoY, rising from INR550.7mn in FY23 to
INR644.3mn in FY24. Similarly, PBT clocked a 31.2% increase, growing from
INR156mn in FY23 to INR204.7mn in FY24. We forecast data products shall further
aid revenue expansion.
BSE
Colocation facility likely to add revenue stream

BSE’s state-of-the-art data centre offers a speed of 6 microseconds and, according
to the company, is the fastest colocation service in India, with a round-trip network
latency of under 10 microseconds and order response time of ~16 microseconds.
BSE provides market access across equity, equity derivatives and currency
derivatives segments.
Currently, BSE does not charge for order throughput and market data feed and only
charges for rent on cost of racks. With more volume build-up, colocation charges
shall further aid revenue growth.
BSE
Valuations
 Initiate coverage at ‘BUY’ and a TP of INR6,730 (30% upside potential) i.e. FY27E
P/E of 50x + value of 15% stake in CDSL.
 Our TP of INR6,730 implies target valuation of FY26E/27E P/E of 58.4x/50.1x and

EV/NOPLAT of 63.8x/54.2x.
 We add the value of CDSL to our TP of INR1,740 valuing CDSL at a market

capitalisation of INR363.6bn. BSE owns a 15% stake in CDSL, implying value of
stake at INR 54.5bn, and contributing 5.9% to our TP.
We are initiating coverage on BSE with a ‘BUY’ and TP of INR6,730 based on target
valuation of 50x FY27E EPS plus value of its stake in CDSL. We believe a 50x PE for
the company is apt given duopolistic nature of the industry, and relative valuation
of Indian capital market infrastructure plays such as CDSL, KFINTECH, MCX and
CAMS. We add the value of CDSL to our TP of INR1,740 valuing CDSL at a market
capitalisation of INR363.6bn. BSE owns a 15% stake in CDSL, implying value of stake
at INR 54.5bn, and contributing 5.9% to our TP.
Our TP implies upside potential of 30%. Our TP of INR6,730 implies target valuation
of FY26E/27E P/E of 58.4x/50.1x and EV/NOPLAT of 63.8x/54.2x. At the CMP of
INR5,157, the stock is trading at FY26E/27E P/E of 43.9x/37.6x and EV/NOPLAT of
47.2x/40.0x.
TP of INR6,730 at 50x FY27E EPS + value of CDSL at TP of INR1,740
Particulars (INR bn)
FY27E APAT (ex-CDSL) 17.3
Multiple (x) 50
Core business market cap 868.3
Add: CDSL stake (15%) 54.5
Market Cap 922.8
Valuation (INR/share) 6,730
CMP (INR/share) 5,157
Upside (%) 30
BSE trading at a 1Y forward P/E, which is more than +1 standard deviation of its historical trading averages
BSE 1yr forward P/E
65
52
39
(x)
26
13
0
Oct-19 Apr-20 Oct-20 Apr-21 Oct-21 Apr-22 Oct-22 Apr-23 Oct-23 Apr-24 Oct-24
1 Year forward P/E Average P/E -1 SD +1 SD
BSE
Valuations comps- Indian financial infra companies such as CDSL, KFIN, MCX, CAMS and BSE trading at high valuations
Mkt. Cap FY24-27E CAGR P/E P/B RoE EBITDA Margin (%)
Company Name CMP TP Rating
(INR bn) EPS Revenue FY25E FY26E FY27E FY25E FY26E FY27E FY25E FY26E FY27E FY25E FY26E FY27E
Asset Management
HDFC Asset
3,835 5,150 Buy 819.7 17.2 18.9 33.3 30.1 26.2 10.2 9.2 8.2 32.5 32.1 33.0 78.9 80.1 80.8
Management Co Ltd
Nippon Life India
636 880 Buy 402.9 17.7 19.8 28.2 25.6 22.1 9.1 7.7 6.4 33.9 32.5 31.6 64.6 66.7 68.9
Asset Manage
Aditya Birla Sun Life
725 900 Hold 209.0 10.8 13.1 21.9 21.2 19.7 5.7 5.1 4.5 28.1 25.4 24.1 57.9 57.9 58.3
Asset Ma
UTI Asset
1,184 1,510 Buy 151.5 9.4 15.3 19.4 16.4 15.0 3.2 2.9 2.7 17.0 18.6 18.7 47.6 48.8 49.4
Management Co Ltd
Broking
Prudent Corporate
2,661 3,270 NR 110.2 39.2 31.0 51.0 38.5 29.9 16.0 11.4 10.0 37.0 34.9 32.7 24.9 26.2 27.5
Advisory Ser
Angel One Ltd 2,447 3,434 NR 220.8 20.7 28.5 16.2 14.5 10.9 4.0 3.3 2.7 32.5 24.7 27.0 33.8 34.4 36.6
Nuvama Wealth
6,108 7,928 NR 219.1 23.7 22.1 23.8 21.6 18.8 6.4 5.5 4.8 29.9 28.6 28.3 53.1 51.8 50.2
Management Ltd
360 ONE WAM Ltd 1,102 1,221 NR 427.9 21.4 20.5 40.3 34.4 29.3 9.0 7.9 7.2 26.0 25.9 27.9 50.5 53.1 53.0
Motilal Oswal
826 1,060 NR 495.2 35.6 25.9 15.5 18.4 11.7 4.0 3.1 2.4 20.1 18.8 18.2 56.3 56.5 55.9
Financial Servic
Exchange
BSE Ltd 5,157 6,730 Buy 708.1 70.8 39.9 58.8 43.9 37.6 19.5 16.8 14.5 31.7 37.4 38.0 50.0 56.8 57.6
Multi Commodity
5,567 6,563 NR 283.9 111.3 33.4 48.3 37.6 31.6 17.4 14.7 12.3 38.3 41.4 40.8 62.6 65.5 66.7
Exchange of In
Depository
Central Depository
1,529 1,740 Hold 319.6 21.4 20.5 56.0 49.8 42.7 18.6 15.9 13.6 35.9 34.4 34.4 61.5 62.4 64.0
Services In
Computer Age
4,282 5,250 Hold 211.4 25.0 17.3 45.4 38.0 32.2 20.4 17.2 14.6 48.7 49.2 49.2 46.4 48.5 49.7
Management Servic
Kfin Technologies Ltd 1,255 1,400 Hold 215.7 21.8 17.9 65.3 57.8 48.5 16.1 13.8 11.8 26.7 25.8 26.3 44.3 45.5 46.1
Source: Company, Nuvama Research, Bloomberg; Note; NR = not rated; For not rated stocks Bloomberg estimates have been used.
BSE clocks five-year EBITDA CAGR of 82.6%; delivering PAT margin of 25.1%
FY Revenue 5-Y CAGR EBITDA 5-Y CAGR PAT 5-Y CAGR EBITDA margin PAT margin
Exchanges RoE (%)
Ending (FY24) (%) (FY24) (%) (FY24) (%) (%) (%)
USA
ICE Dec 7,968 8.9 5,242 9.3 3,161 7.6 65.8 39.7 12.4
NASDAQ Dec 3,842 8.7 2,136 10.2 1,403 11.1 55.6 36.5 20.7
Europe
LSE Dec 10,128 27.4 4,800 24.4 2,273 20.0 47.4 22.4 6.9
DBG Dec 5,433 11.4 3,166 9.9 1,934 9.9 58.3 35.6 19.7
Asia
HKEX Dec 2,647 4.7 1,953 4.4 1,521 4.6 73.8 57.4 23.2
JPX Mar 953 -2.7 648 -1.9 372 -3.3 68.0 39.1 13.8
NSE Mar 1,786 33 1,192 34.1 1,005 37.5 66.8 55.8 38.1
SGX Jun 859 5.7 483 5.5 360 5.3 56.2 41.9 30.7
BSE Mar 168 21.1 48 82.6 42 10.3 28.8 25.1 11.6
Canada
TMX Dec 886 8.0 484 6.9 299 6.4 54.6 33.7 9.7
Oceania
ASX Jun 681 3.1 424 -0.7 314 -1.2 62.3 46.1 13.1
Source: Bloomberg, Nuvama Research Note: All numbers are in USD mn ICE, LSE, DBG, HKEX, Nasdaq, TMX- FY ending is CY ending in Dec
BSE
Indian exchanges likely to trade at higher valuations due to higher growth and return ratio expectations
Mkt. Cap FY24-27E CAGR P/E P/B ROE (%) EBITDA Margin (%)
Company Name
(USD bn) EPS Revenue FY25E FY26E FY27E FY25E FY26E FY27E FY25E FY26E FY27E FY25E FY26E FY27E
Intercontinental
82.0 10.1 9.3 25.5 23.6 21.4 19.1 3.1 3.0 2.8 2.7 12.4 12.2 12.1 12.9
Exchange
London Stock Exchange
75.3 11.1 7.1 34.3 32.1 28.4 25.0 2.4 2.6 2.5 2.4 6.9 8.0 8.1 9.1
Group PL
Deutsche Boerse AG 43.4 5.5 6.2 22.4 21.3 20.4 19.1 4.2 3.9 3.5 3.1 19.7 18.7 17.4 16.8
Hong Kong Exchanges &
44.8 6.3 6.4 29.4 27.0 25.7 24.5 6.7 6.6 6.4 6.1 23.2 24.6 25.1 25.5
Clearing
Nasdaq 43.6 8.6 12.3 27.0 27.0 24.3 21.1 6.8 3.9 3.8 3.5 20.7 14.9 15.2 15.9
Japan Exchange Group 11.3 4.4 5.9 30.3 28.7 27.6 26.7 NA NA NA NA 13.8 18.7 18.8 19.3
TMX Group 8.3 10.1 9.2 27.5 26.2 23.1 20.6 2.7 2.6 2.5 2.4 9.7 9.6 10.5 11.0
ASX 7.6 1.2 3.1 24.1 24.7 24.2 23.3 3.2 3.2 3.1 3.1 13.1 13.1 11.8 12.2
Singapore Exchange 9.4 8.1 5.6 26.8 23.5 21.7 21.2 7.8 6.9 6.0 5.5 30.7 28.9 27.2 26.1
BSE 8.2 51.9 42.3 118.9 56.9 44.8 33.9 20.6 17.0 14.1 12.1 15.6 35.3 39.5 43.0
Source: Bloomberg, Nuvama Research
Note: ICE, LSE, DBG, HKEX, Nasdaq, TMX- financial year implies calendar year i.e. FY25E is CY24 and so on.
BSE
Financial Outlook
 We reckon share of transaction charges shall increase substantially to 58% of
total revenue by FY27E from 32.3% in FY24.
 FY24–27E CAGR: Revenue - 39.9%, EBITDA - 76.3% and APAT (ex- CDSL) - 70.8%.
 RoE likely to be 37.9% by FY27E.
Revenue growth likely to sustain despite near-term impact of regulatory changes

We anticipate changes in derivative contract sizes and expiries to affect NSE more
than BSE. Furthermore, given that BSE is still in the ramp up stage we believe there
is scope for market share gain in the equity index options segment. We estimate BSE
shall deliver an operating revenue CAGR of 39.9% over FY24–27E. We forecast
EBITDA margin shall improve to 57.6% by FY27E, from 28.8% in FY24. This is likely to
drive EBITDA CAGR of 76.3% over FY24–27E to INR21.9bn by FY27E.
We forecast APAT margin shall improve to 45.6% by FY27E, from 25.1% in FY24. This
is likely to drive APAT CAGR of 70.8% over FY24–27E to INR17.3mn by FY27E. During
FY24, BSE delivered a subdued RoE of 11.6%; we estimate RoE shall improve to
37.9% by FY27E.
Total operating revenue likely to grow at a CAGR of 39.9% over FY24–27E
Revenue Breakdown (INR mn) FY24 FY25E FY26E FY27E
Transaction Charges 4,491 15,485 18,595 22,037
-Equity Cash 2,595 3,249 3,557 3,991
-Equity Derivative 1,762 12,232 15,038 18,046
-Currency Derivative 134 4 - -
Treasury Income 1,840 2,256 2,423 2,544
MF revenue 1,281 2,274 2,610 2,871
Clearing & Settlement Charges 1,262 1,020 1,488 1,706
Listing Fees 2,805 3,369 4,157 4,866
Book Building 476 738 886 930
Data Dissemination Fee 431 690 794 913
Others 1,313 1,724 1,950 2,185
Total Operating Revenue 13,900 27,558 32,904 38,053
BSE
Transaction charges to gain share in revenues

Revenue Mix (%) FY22 FY23 FY24 FY25E FY26E FY27E
Transaction Charges 28.0 19.9 32.3 56.2 56.5 57.9
Treasury Income 7.4 10.2 13.2 8.2 7.4 6.7
MF revenue 6.8 9.6 9.2 8.3 7.9 7.5
C&S Charges 6.1 9.1 9.1 3.7 4.5 4.5
Listing Fees 29.7 28.5 20.2 12.2 12.6 12.8
Book Building 7.5 5.5 3.4 2.7 2.7 2.4
Data Dissemination Fee 4.8 4.8 3.1 2.5 2.4 2.4
Others 9.6 12.4 9.4 6.3 5.9 5.7
Total 100 100 100 100 100 100
Revenue Growth (%)
Transaction charges 96.1 -22.1 176.9 244.8 20.1 18.5
-Equity Cash 100.9 -24.5 70.2 25.2 9.5 12.2
-Equity Derivative - - - 594.0 22.9 20.0
-Currency Derivative 10.7 56.5 38.1 -96.9 -100.0 -
Treasury Income 83.0 51.0 121.1 22.6 7.4 5.0
MF revenue 47.8 56.0 63.0 77.5 14.8 10.0
Clearing & Settlement Charges 108.2 64.2 69.8 -19.1 45.9 14.7
Listing Fees 18.7 5.6 20.5 20.1 23.4 17.1
Book Building 62.4 -20.2 6.6 55.0 20.0 5.0
Data Dissemination Fee 7.9 7.9 11.0 60.0 15.0 15.0
Others 28.6 41.1 30.2 31.3 13.1 12.0
Total 48.2 9.7 70.4 98.3 19.4 15.7
Revenue drivers BSE

Equity cash ADTV (INR bn) 54.0 41.3 66.2 80.6 89.1 102.3
YoY growth (%) -23.4 60.3 21.7 10.6 14.8
Equity cash ADTV market share (%) 7.5 7.0 7.5 6.5 6.5 6.5
Index option ADPTV (INR bn) 0.0 0.0 20.0 77.9 93.7 112.4
YoY growth (%) NA 288.9 20.3 20.0
Index option ADPTV market share (%) 0.0 0.0 3.1 11.4 14.9 14.9
EBIT margins to expand 3,154bp to 53.4% over FY24–27E

25 60
53.1 53.4
20 46.3 48
20.3
15 17.5 36
(INR bn)
(%)
12.9
10 24
21.9
16.8
5 12
1.4 3.0
0 0
EBIT (INR bn) EBIT margin (%)
BSE
APAT CAGR of 70.8% over FY24–27E with likely RoE of 37.9% in FY27E
20 40
37.6 37.9
16 32.1 17.3 32
15.0
12 24
(INR bn)
(%)
11.3
8 16
11.6
4 8
6.3
1.7 3.5
0 0
APAT (INR bn) RoE (%)
BSE likely to deliver FCFE as percentage of sales of 40%-plus

24.0 240.0
197.5
16.0 121.8 160.0
19.8
8.0 15.3 17.3 15.1 16.2 80.0
(INR bn)
(%)
71.9
46.0 42.6
- -
FY22 FY23 FY24 FY25E FY26E FY27E
(8.6)
(8.0) (80.0)
(96.5)
(16.0) (160.0)
FCFE FCFE as % of revenue (%)
BSE
Key Risks
Changing regulations and any adverse regulatory action: SEBI extensively regulates
exchanges in India. Any change in regulations can have a material impact on business
growth, market share and/or result in significant changes in costs. Examples include
changes in expiry days and lot sizes for index options, elevated margin requirements
and increased contribution requirements towards core SGF. Such changes may lead
to earnings volatility. Our view is that the impact of recent regulatory changes is
lower on BSE compared with NSE.
Dependence on index options in derivative segment: Even though BSE offers single
stock futures and options, it has not yet gained significant traction. Its major income
from the derivative segment is just through index options. A slowdown in growth in
this segment may affect earnings significantly.
Any large-scale macro slowdown: A large broad scale economic slowdown may hurt
capital market sentiments and affect trading volumes. Given that transaction
charges shall account for 58% of BSE’s consolidated revenue, a slowdown in trading
activity may result in a sharp decline in revenue and earnings.
Technology infrastructure or security risks: BSE’s trading platform and networks

may be vulnerable to cyber-attacks and security breaches. This could lead to a loss
of customer data and disruption of services, which could lead to litigation, loss of
goodwill as well as reduction in volumes. This may result in a loss of credibility and/or
additional regulatory penalties on the exchange.
Regulatory compliance: A number of regulatory approvals are required for growth

and operations of the business. Failure to obtain the same may result in heavy
sanctions and penalties by SEBI and other regulatory authorities.
Launch and success of new exchange/s: As exchanges are now allowed to offer
index derivative products expiring only on one day a week, there is a possibility new
exchanges could be set up to provide products on days not taken up by other
exchanges. This may affect future growth of volumes at BSE.
Interest rate risk: Its investments are exposed to the effects of fluctuations in market
interest rates; hence, declines in interest rates may adversely affect its value.
BSE
Company Description
BSE was established as ‘The Native Share & Stock Brokers' Association’ in 1875 and
was the first stock exchange in Asia. It is the fastest stock exchange in the world with
a speed of 6 microseconds. BSE became the first listed stock exchange in India in
2017. The exchange provides an efficient and transparent market for trading in
equity, currencies, debt instruments, derivatives and mutual funds. Indian Clearing
Corporation Ltd, a wholly-owned subsidiary of BSE, acts as the central counterparty
to all trades executed on the BSE trading platform.
BSE SME is India’s largest SME platform, with over 480 companies listed and
continues to grow at a steady pace. BSE StAR MF is India’s largest online mutual fund
platform, which processed over 420mn transactions and added 27.1mn new SIPs in
FY24.
BSE has a diversified revenue stream comprising transaction charges, listing services,
treasury income, index services, data feed and others.
Brief timeline of BSE’s development over the decades
Sep-24 shareholding pattern

Category Shareholding pattern (%)
FII 13.0
DII 11.7
Public 52.4
Others 22.9
Total 100.0
BSE
Top ten shareholders as of Sep-24

Top 10 Shareholders Shareholding (%)
Life Insurance Corporation of India 5.6
Siddharth Balachandran . 3.7
Tata Aia Life Insurance Co Ltd 2.3
Nippon Life India Trustee Ltd 1.9
Mukul Mahavir Agrawal 1.5
HSBC Small Cap Fund 1.3

Invesco India Midcap Fund 1.2
New World Fund Inc 1.2
S Gopalakrishnan 1.2
Zerodha Broking 1.1
BSE
Management Overview
Mr Sundararaman Ramamurthy, MD & CEO
Mr Ramamurthy is a highly motivated leader and consistent performer with a
successful track record of 38 years and strong passion to lead a financial institution.
He is a Cost Accountant and member of the Indian Institute of Bankers.
Academically, Mr Ramamurthy is a Bachelor of Science. He was the MD & Chief
Operating Officer of the Indian arm of Bank of America (BANA), where his
responsibilities included global governance and control of the banking entity in India
and the securities segment.
With over 20 years of work experience at NSE and as a senior member of the NSE
team since its inception, he was responsible for significant transformation of the
Indian capital markets for over two decades. He has also worked with leading public
sector banks, viz. Industrial Development Bank of India, State Bank of India and
Indian Overseas Bank.
Mr Deepak Goel, CFO

Mr Goel has 20-plus years of experience in financial planning, balance sheet & P&L
management, investor relations, tax compliance and management, and other areas.
He has previously worked for Kotak Group and Edelweiss Financial Service in various
senior management roles. He is a Chartered Accountant by qualification.
Mr Sunil Ramrakhiani, CBO

Mr Ramrakhiani has 25-plus years of experience in senior roles in Indian financial
markets in exchanges, wealth management, and treasury in banking. He has
previously worked at Equirus Capital, IL&FS Investsmart Securities, ICICI Bank and
other companies in various senior management roles. He is an MBA in finance and
Bachelor of Engineering.
Mr Subhash Kelkar, CIO

Mr Kelkar has 30-plus years of experience in technology and digital, holding senior
management positions in banking and finance, capital markets and telecom
domains. He has previously worked for ICICI Securities, IIFL Holdings, CMS
Infosystems, Tech Mahindra, TCS and more. Mr Kelkar is a PG Diploma holder in
Software Technology and a Bachelor of Engineering by qualification.
Mr Kamala Kantharaj, Chief Risk Officer

Ms Kantharaj, a chartered accountant, has 33 years of experience in the areas of
Finance. She has previously worked for PFC, NSE, Edelweiss Financial Services and
more, and has been part of various reforms in capital markets, actively participating
in policy making through regulatory committees.
Mr Sameer Patil, CSP

Mr Patil has 25-plus years of experience in capital market segments such as
commodities, currencies and indices. In his previous stint as Senior VO (PKMT & BD)
at MCX, he was one of the core founding team members responsible for setting up
the exchange in India. He is an MBA in finance.
BSE
Board of Directors
Name Designation Others
Prof. Subhasis Chairman (Public
Currently Chair Professor at K.N. Bajaj, Former Director of IIT Bombay
Chaudhuri Interest Director)
Mr Sundararaman
MD & CEO Former MD & COO in Indian arm of Bank of America (BANA), 20 years at NSE as a senior member
Ramamurthy
Former consultant advisor at Ohum Healthcare Solutions, former Management Director at Deutsche Bank
Mr Umakant Jayaram Public Interest Director
Group, former Executive Director at JP Morgan
Management Trustee in ISMW, Board Director in Ananya Finance for Inclusive Growth, TFC and Gujarat
Ms Jayshree Vyas Public Interest Director
Urban Cooperative Bank Federation
Justice Shiavax Jal
Public Interest Director Former Chief Justice of Punjab & Haryana High Court
Vazifdar
Dr Padmini Srinivasan Public Interest Director Faculty at IIMB, Member of Academic oversight body of the international Integrated Reporting Council
Mr Nandkumar
Public Interest Director Former CEO of ReBIT's and Data Security Council of India
Saravade
Mr Jagannath Non-independent
MD of LIC
Mukkavilli Director
BSE
Industry Outlook
Indian exchanges set to benefit from several macro positives
Under penetration of capital markets: India has a moderate M-cap to GDP ratio
of 125% compared with 259% for Switzerland, 196% for the US and 147% for Japan,
which reflects room for upside. A consistent increase in GDP along with higher share
of corporate earnings and a rise in the number of listed companies should lead to
market expansion. Moreover, after covid, India experienced a surge in its m-cap to
over 100% facilitated by an increase in retail participation and market valuation.
India’s m-cap to GDP comparatively lower than global peers
300
259
240
196
183
180 147
(%)
125
120 99
82 80
59 53
60
18
0
Australia
India
Germany
Switzerland
US
China
Japan
Luxembourg
Taiwan
Singapore
South Africa
Source: Bloomberg, Nuvama Research
Note: As on 5th Nov 2024
India’s m-cap to GDP has surged post-covid due to higher participation
150
123
120 113
104
95
89
90 79 77
73 76
70 69
(%)
63
60
30
-
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: CEIC, Nuvama Research
BSE
Improving share of financial assets in savings: Indian households currently

allocate a significant portion of their savings (70%) to physical assets such as gold
and real estate, resulting in a relatively lower share of financial assets compared with
developed economies. The penetration of capital markets in India remains notably
low, with only 6.9% of gross financial savings directed towards equities and
debentures. Given overall GDP expansion along with greater financial knowledge
and understanding about capital markets, the allocation of savings towards financial
assets is set to rise.
Equities, debentures’ share in household savings trending up since FY21
35 13
10.8
28 8.6 10
8.2
7.6
6.9
21 8
(INR tn)
(%)
14 4.1 5
3.5
7 3
16.1 20.6 22.6 23.2 30.7 26.1 29.7
0 0
FY17 FY18 FY19 FY20 FY21 FY22 FY23
Gross financial savings(LHS) shares & debentures (%) (RHS)
Source: RBI, AMFI, Nuvama Research
Non-financial assets stay dominant at over two–thirds over years
100
80
58
(As % of savings)
73 68 69 67 69
60 79 79 76
40
20 42
27 32 31 33 31
21 21 24
0
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Financial assets Non- Financial asset

Source: RBI, Nuvama Research
Turnover velocity set to improve: Turnover velocity is the ratio between cash
market turnover of domestic shares and their market capitalisation. A higher
turnover velocity reflects liquidity in the market that leads to better price discovery.
The turnover velocity at NSE is at 45%, which is considerably lower than that of other
exchanges, and offers scope of more investor participation. Given higher retail and
institutional participation driven by technological advancement and growth of the
Indian economy, the turnover velocity is set to accelerate in future.
BSE
Turnover velocity of India considerably lower at 45% in CY23
450
395
360
270
(%)
172
180
104
90 60 57 47 45 37
Canada
India
Germany
China
Korea
Japan
Hongkong
Euronext
Source: WEF, Nuvama Research
Demat accounts leapfrog FY20 onwards: Demat accounts have taken a notable leap
after FY20 reaching 182mn by Nov-24 and have surged 4x from FY19 indicating
strong capital market participation by retail investors thanks to digital discount
brokers actively targeting new demographics, leveraging rising smartphone
penetration and public digital infrastructure (eKYC) for fast on boarding. Various
financial influencers spread financial awareness, and regulators promote
transparency and efficiency to boost investor confidence to boost the participation
of the investors.
Demat accounts surge post-FY20
200 182
160 151
114
120
(mn)
90
80
55
36 36 41
40 28 32
23 25
0
FY25TD
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
Source: NDSL, CDSL, Nuvama Research

Note: FY25 until Nov-24
Rising retail participation: Rising retail participation of investors in the capital

market ecosystem is supporting its structural growth by broadening the investor
base and providing an opportunity for a more inclusive financial growth and wealth
creation. New-age discount brokers such as Groww, Zerodha and AngelOne are
attracting significant retail investors to the market with low charges, marketing and
technology infrastructure.
BSE
Active client traded in equity derivative on BSE post-launch in May-23
6.0 5.6
5.2
4.8
4.8 4.4
4.0
3.5
3.6 3.1
(mn)
2.7
2.2
2.4
1.7
1.2
1.2 0.9
0.6
0.3
0.0 0.1 0.1
-
Jul-23
Jul-24
Jun-23
Jun-24
Aug-24
May-23
Nov-23
Apr-24
May-24
Aug-23
Sep-23
Dec-23
Jan-24
Feb-24
Mar-24
Sep-24
Oct-23
India’s cash equity ADTV has grown at an FY14–24 CAGR of 21% to INR 883bn,
whereas equity index options ADPTV has grown at an FY14–24 CAGR of 50.6% to
INR582bn. India’s futures ADTV has grown at an FY14–24 CAGR of 15.2% to
INR1,341bn in FY24. BSE has ~7% market share in cash ADTV, 12% in equity index
options ADPTV and only 0.1% in futures ADTV.
India’s cash equity ADTV grows at an FY14–24 CAGR of 21% to INR 883bn
1,400 90
71.8
1,120 62.6 66
49.9
840 44.1 42
(INR bn)
38.5
(%)
560 21.2 18
11.2 7.5
0.7 4.0
280 (5.6) (18.4) (6)
131 213 201 244 338 352 391 672 722 589 883 1,273
0 (30)
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25E
Cash ADTV (INR bn) YoY Growth (%)

BSE
BSE has ~7% market share in cash equity ADTV

1,250 7.6
7.5 7.5
1,207
1,000 7.2
7.0
750 817 6.8 6.8
(INR bn)
(%)
630 668
500 6.4
548
6.2
250 6.0
54 66 88
42 41
- 5.6
FY21 FY22 FY23 FY24 FY25TD
NSE BSE BSE market share (%)
Note: FY25TD is as of Nov-24
Industry equity index options ADPTV logs 50.6% CAGR over FY14–24
600 190
140.9
480 150
123.1
360 110
(INR bn)
86.2
(%)
68.4
240 70
31.9 30.9 32.7 39.0 32.6
120 12.3 13.9 30
(1.3)
10 11 14 14 19 26 44 106 236 439 582 662
0 (10)
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
Equity Index Options ADPTV (INR bn) YoY Growth (%) FY25E
BSE gains ~12% market share as of Nov-24 in equity index options ADPTV
600 562 599 15
11.7
480 439 12
360 9
(INR bn)
(%)
236
240 6
106 3.4
120 79 3
20
0 0 0
0 0.0 0.0 0.0 0
BSE
Futures ADTV grows at an FY14–24 CAGR of 15.2% to INR 1.34tn

1,500 57.9 70
1,200 50
33.0
24.2 24.5
900 30
(INR bn)
17.1
(%)
18.0 9.0
5.3
600 (2.1) 0.2 10
(3.6) (4.5)
300 (10)
325 513 502 624 830 874 875 1,0901,1881,1451,3411,280
0 (30)
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25E
Futures ADTV (INR bn) YoY Growth (%)
NSE has almost 100% share in futures ADTV

2,000 1,992 0.5
1,600 0.4
1,340
1,188 1,145
1,200 1,090 0.3
(INR bn)
(%)
800 0.2
400 0.1 0.1

0.1
0 0 0 1 2
0 0.0 0.0 0.0 0.0
BSE
Additional Data
Management Holdings – Top 10*
MD & CEO Shri Sundararaman Ramamurthy % Holding % Holding
CRO Ms. Kamala K. Life Insurance 5.60 HSBC Small Cap 1.29
Siddharth Balac 3.69 Invesco India M 1.24
CFO Shri Deepak Goel
Tata Aia Life I 2.28 New World Fund 1.19
Nippon Life Ind 1.86 S Gopalakrishna 1.18
Auditor M/s. S. R. Batliboi & Co. LLP Mukul Mahavir A 1.48 Zerodha Broking 1.08
*Latest public data
Recent Company Research Recent Sector Research

Date Title Price Reco Date Name of Co./Sector Title
Other financial Strong core earnings growth;
07-Jan-25
services Sector Update
Other financial Nov-24: Equity net inflows
10-Dec-24
services moderate; Sector Update
Modest showing in seasonally slow
15-Nov-24 MEDIASSIST
Q2; Result Update
Rating and Daily Volume Interpretation

5800 36
4640 30
24
3480
(INR)
(Mn)
18
2320
12
1160 6
0 0
Nov-24
Nov-22
Nov-23
Jan-22
Jan-23
Jan-24
Jul-22
Jul-23
Jul-24
May-22
Sep-22
May-23
May-24
Mar-22
Mar-23
Sep-23
Mar-24
Sep-24
Volume BSE IN EQUITY Buy Hold Reduce
Source: Bloomberg, Nuvama research
Rating Rationale & Distribution: Nuvama Research

Expected absolute returns
Rating Rating Distribution
over 12 months
Buy 15% 226
Hold <15% and >-5% 62
Reduce <-5% 27
BSE
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January 2025

Madhukar.Ladha Mahrukh Adajania

Nuvama Institutional Equities

Robust structure: Multiple streams to propel revenue growth

Madhukar Ladha Mahrukh Adajania

“I want to make BSE a vibrant place. In

Lower clearing charges likely to drive margin improvement

Diverse revenue streams to fuel revenue growth

 Dependence on index options in derivative segment.

 Any large-scale macroeconomic slowdown may affect capital market sentiment,

 Technological infrastructure or security failure may result in a loss of credibility

 Failure to obtain regulatory approvals required for operations may result in

 BSE’s operating investment investments are exposed to interest rate risk.

The Story in Charts

Source: Company, NSE, Nuvama Research

Important Ratios (%) Free Cash Flow (INR mn)

Assumptions (%) Key Ratios

Valuation Metrics Valuation Drivers

BSE to face limited impact of changed index derivative regulations

Key changes include:

Rationalisation of weekly index derivatives products and increase in lot sizes

SEBI has decided to rationalise index derivatives products offered by exchanges,

Notes: *Will be revised from 26-Dec-24

**Will be revised from 24-Dec-24

Note: *Lot size to change on 27-Dec-24

Weekly expiries drive large share in volumes

We estimate that during FY25TD (Apr-24–Oct-24) weekly equity index option

NSE’s discontinued contracts form 46.9% of premium T/V in FY25TD

Source: NSE, Nuvama Research

Note: For contracts expiring during Apr-24 to Oct-24

BSE’s discontinued contracts form 21.3% of premium T/V in FY25TD

Note: For contracts expiring during Apr-24 to Oct-24

On NSE, expiry day premium turnover share at ~30%

10 14.1 14.1 2.6 5.5

Source: NSE, Nuvama Research

Note: For contracts expiring during Apr-24 to Oct-24

On BSE, expiry day premium turnover share at more than 80%

Source: BSE, Nuvama Research

Note: For contracts expiring during Apr-24 to Oct-24

Source: Company, Nuvama Research

BSE’s derivative active clients has room to grow

Early trend indicates BSE continues to hold on and grow volumes

Premium to notional turnover ratio set to improve

The above-mentioned changes are likely to result in an improvement in long dated

BSE’s monthly premium to notional turnover considerably lower than NSE

10 7.5 6.9 7.0 6.9 7.2 7.8 7.5 7.7

Source: NSE, BSE, Nuvama Research

Transaction charges to play pivotal role in revenue growth

During FY20–24, transaction charges revenue expanded at a CAGR of 50.7% to

BSE’s operating revenue grows at FY20–24 CAGR of 32.5%

Revenue (LHS) Growth (RHS)

Transaction charges for BSE/NSE grow 141.6%/19.1% YoY in FY24

Source: NSE, BSE, Nuvama Research

BSE’s revenue composition moving from listing to transaction charges

47.6 46.2 36.3

BSE’s market share in Indian capital markets

BSE has 6.7% market share in cash equity ADTV

BSE ADTV (LHS) NSE ADTV(LHS) BSE Market share (RHS)