BSE – the oldest stock exchange in Asia – has beaten all other equity exchanges in the world to become the most expensive stock globally. A 262% rally over the last six months, driven by a revision in transaction charges, has taken the bourse’s price-to-earnings (P/E) ratio to 48.31 times its one-year forward earnings. This compares to PE ratios of 44.2 times for MCX, 27.8x for Japan Exchange, and 22.9x for the London Stock Exchange, according to Bloomberg data.
While the stock of Japan Exchange Group has surged nearly 38% over the last six months, Germany's Deutsche Borse witnessed a fall of 17% during the same period. Other stock exchanges like Hong Kong Exchanges, Nasdaq, and Euronext have also registered declines ranging from 11% to 14% over the last six months.
Surging valuation | |
| Exchange | 1-year forward PE (x) |
| BSE | 48.31 |
| MCX | 44.17 |
| IEX | 29.51 |
| Japan Exchange | 27.84 |
| HKEX | 26.87 |
| CME Group Inc | 23.15 |
| LSE | 22.87 |
| Bursa Malaysia | 22.58 |
| Cboe Globak Mark | 20.98 |
| Singapore Exchange | 18.67 |
| Intercontinental Exchange | 18.42 |
| Nasdaq | 17.51 |
| Deutsche Borse | 15.62 |
| B3 SA | 13.04 |
| Euronext | 11.57 |
Source: Bloomberg |
Shares of BSE have been rising ever since the stock exchange announced an increase in transaction charges in the equity derivatives segment, effective from November 1. These changes will primarily be levied on S&P BSE Sensex Options, particularly the nearest or immediate expiry contracts.
According to IIFL Securities, the increase in Equity Option tariffs by 3-6.5x (with a blended increase estimated at 5x), would lead to 25-35% upgrade in FY25-26 EPS. "Since the tariffs are still 25-40% lower than NSE, there is further room for an increase," added the domestic brokerage.
As far as volumes are concerned, BSE accounts for 10% of the country's Option turnover (3.6% of premium turnover), and this is likely to rise with an improvement in Bankex volumes, which currently represent less than one percent of Sensex volumes.
According to Bloomberg consensus estimates, BSE is expected to record a net profit of ₹567 crore in FY24, compared to last year's net profit of ₹221 crore.
Interestingly, barring 2020 and 2021, BSE's stock had ended in the red every year since its listing in 2017. Shares of BSE added another five percent on Wednesday to end the session at ₹1,788.70 on NSE.
(Edited by : Anand Singha)
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