From Rs 33 to Rs 3,500: 3 'mantras' lead to turnaround for this stock; What's next?

Domestic brokerage firm Equirus Securities has initiated coverage on BSE Ltd, one of India’s prominent stock exchanges, which has rewarded investors handsomely in the last six years. It has scripted its turnaround on the back of three key factors including liquidity, scalability and profitability over the years.

Shares of BSE have zoomed 105 times in the last six years. The stock was seen around Rs 33 in April 2020 and is currently hovering at Rs 3,500 on Thursday, commanding a total market capitalization close to Rs 1.45 lakh crore. The stock has zoomed 62 per cent in the last one year and its up 35 per cent in 2026 so far.

BSE has successfully transitioned from a listing-led, cash-equity-focused platform to a derivatives-driven model. According to Equirus Securities, equity derivatives contribute over 60 per cent of BSE's revenues. The exchange's premium market share has reached 28 per cent, while its notional share stands at around 42 per cent in FY26. This shift has increased transaction income.

Equirus notes that the volume quality at BSE has improved considerably, with the premium-to-notional turnover rising from 6-7 basis points to approximately 10 basis points in FY26. The firm anticipates a 19 per cent compound annual growth rate (CAGR) in index options notional turnover and expects the premium-to-notional ratio to improve to 11.6 basis points by FY28.

The operating leverage is evident with Ebitda margins reaching around 64 per cent in the first nine months of FY26. Revenue growth has surpassed cost growth, leading to expectations of margin expansion to 66-67 per cent over FY27E and FY28E. Equirus foresees a 21 per cent revenue CAGR, a 23 per cent Ebitda CAGR, and a 22 per cent PAT CAGR over FY26E-FY28E.

The derivatives segment remains the core driver of earnings growth, as noted by Equirus Securities. Post the relaunch of Sensex and Bankex weekly contracts, derivatives contribute over 80 per cent of transaction revenues. Improved liquidity and participation have led to a premium market share of around 28 per cent and a premium-to-notional ratio of 10 basis points.

Equirus highlights ecosystem initiatives such as Smart Order Routing (SOR) and Common Contract Note (CCN), which are reducing execution friction and aiding the gradual recovery in cash market share to about 7 per cent. These initiatives support liquidity and cross-participation across segments.

BSE has developed multiple scalable and high-margin revenue streams beyond derivatives. Since the start of FY27, BSE's stock has rallied by over 25 per cent and trades at 39 times the FY28E earnings per share (EPS). Equirus Securities has initiated coverage with an 'ADD' rating, setting a target price of Rs 3,765 for March 2027, based on 42 times the FY28E core EPS.
 

BSE Q4 results preview

BSE is expected to post a strong revenue growth, driven by higher options revenue, partly offset by softer cash and decline in IPO revenue. Margins are set to improve, owing to robust growth and lower clearing costs as premium realization inched up in the quarter. Options premium stood at Rs 28,900 crore, up 145 per cent YoY, driving transaction revenue, said HDFC Securities.

"Total revenue is likely at Rs 1,574 crore, up 86 per cent YoY, with derivatives contributing Rs 1,128 crore (72 per cent of total). Ebitda margin should improve to 68 per cent. SGF outgo is expected to be at Rs 63 crore, 6 per cent of derivatives revenue, similar to last quarter. APAT is estimated at Rs 757 crore," it added.

The regulatory concerns around weekly options are behind and BSE has been gaining market share. HDFC Securities estimates options premium of Rs 29,100 crore for Q1, which is 30 per cent below vs the April run-rate. BSE is witnessing continuous earnings upgrades. it maintained an 'add' with a target price of Rs 3,800, valuing the core business at 40 times FY28E PAT.
 

BSE results and dividend date

The company board of BSE will consider and announce its financial results for the quarter and financial year results for the period ended on March 31, 2026 on May 07, 2026 (Thursday). The company board may also consider and approve financial dividend for the year ending March 2026.