BSE shares may rally towards ₹2,800 after a 367% surge in 12 months, says Investec

Brokerage firm Investec has upgraded shares of the Bombay Stock Exchange (BSE) Ltd. to "buy" from its earlier rating of "hold."

It has maintained its price target at ₹2,800, implying a potential upside of 38% from Wednesday's closing levels.

Interestingly, Investec, on February 6 had downgraded the stock to "hold" from its earlier rating of "buy" but had raised its price target from ₹2,345 to the current ₹2,800.

Investec wrote in its note that BSE continues to witness strong traction in equity derivatives volumes, as its options market share has tripled sequentially from 4.2% to 15% in March 2024.

The brokerage is anticipating further market share gains for BSE as it reaches 60% to 70% market share on Mondays, given the rapid scale-up of the BANKEX product.

BSE's contribution towards the Settlement Guarantee Fund during the December quarter, which was towards forex, is a one-off cost and is unlikely to recur going forward, according to Investec.

Asia's oldest stock exchange has also managed to reduce clearing charges paid to its peer, the National Stock Exchange (NSE) by 30% sequentially on a per ₹10 lakh basis, the brokerage wrote in its note.

Investec is anticipating an improved margin profile in the March quarter for BSE as these metrics stabilise.

Out of the seven analysts that track BSE, five of them have a "buy" recommendation, while two have a "hold" rating.

Shares of BSE have opened 4.1% higher on Thursday at ₹2,116. The stock has corrected 21% from its record high of ₹2,596.