BSE shares: HDFC Securities raises target price; sees gradual market share gains, flags RBI impact on CMIs' funding

BSE Ltd has received a target price upgrade from HDFC Securities, which retained its 'Add' rating on the stock, while indicating that the pace of market share gains may moderate going forward.

The brokerage stated that the equity derivatives segment has successfully navigated a period of significant regulatory changes and emerged stronger. On BSE, it noted that its notional and premium market share rose to 45.4 per cent and 27.5 per cent, respectively, in Q4 FY26, with notional and premium ADTV growing by 17 per cent and 49 per cent QoQ (quarter-on-quarter).

"However, the uptick was driven by higher market volatility, pushing the P/N to 11.8bps from 9.3bps in Q3. For FY27E, we factor in normalised volumes while incorporating the regulatory impact. Accordingly, we raise our revenue estimates by 5-10 per cent and EPS by ~2–6 per cent, reflecting elevated volumes despite the anticipated moderation," it added.

Despite the recent market correction, HDFC Sec said the stock trades at 38x FY27E earnings, while revising the one-year target price to Rs 3,450 from Rs 3,310 earlier.

With that being said, it mentioned, "We maintain our ADD rating, expecting the pace of market share gains to moderate, with further upside hinging on growth in monthly options, higher FPI and institutional participation, and improvement in cash market share. We assign a SoTP-based target price of Rs 3,450, based on 40x (vs. 42x earlier) FY28E core PAT + net cash excluding SGF and clearing funds + CDSL stake."

The broking firm added, "BSE's options notional volume for Q4 FY26 stood at Rs 245 lakh crore and March exit is Rs 225 lakh crore. The premium ADTV which surged to Rs 28,900 crore in Q4, March 2026 exit is at Rs 33,000 crore. The surge in March-26 volume is due to global volatility lifting P/N to 14.7bps vs the normal 9-10bps range."

"We have normalised the Q1 premium volume to Rs 24,500 crore, which is ~26 per cent lower vs the March-26 levels. BSE premium market share reached a peak of 30.2 per cent in Jan-26 and is at 26 per cent in March-26. We believe the market share is near peak levels and further gain will be gradual. We assume notional market share of 42 per cent/45.5 per cent/49 per cent and premium market share of 25.3 per cent/28 per cent/31.6 per cent for FY26/27/28E, respectively," it also stated.

On the Reserve Bank of India's (RBI's) regulation impact, HDFC Sec noted that the central bank's rules (applicable July 1) impose strict limits on funding for capital market intermediaries (CMIs).

"Under these rules, banks are prohibited from providing direct finance to intermediaries for trading on their own accounts (except market making). While banks may still issue guarantees for proprietary trading, these must now be fully secured (100 per cent) by specific collateral: cash, cash equivalents, or government securities. Further, at least 50 per cent of this security must be in actual cash. These changes increase the capital requirements for CMIs (trading firms) and the derivatives trading volumes could be impacted by ~8-10 per cent. At the industry level, the total margin is ~Rs 9.7 lakh crore, of which, ~Rs 3.5 lakh crore (~35 per cent) is from FDs and BGs. ICCL/ MCXCCL has ~30/59 per cent of its funding from FDs and BGs," it said.