Buy BSE; target of Rs 4000: Motilal Oswal

What happened

Motilal Oswal upgraded BSE to BUY with a target of Rs 4000. It raised FY27/FY28 revenue and profit estimates by 8%/10% and 10%/12%, citing strong options trading volume and a partial regulatory change reversal effective 7-Dec-26.

Confirmed

Global impact / market context

Higher trading volume and a rising premium-to-notional ratio, which means fees earned per unit of traded value, would lift BSE's revenue and profit without a matching rise in costs. That operating leverage is why the broker sees room for a further roughly 20% profit increase.

Analyst inference

BSE's options notional average daily turnover jumped 85% in October versus the August level hit by the earlier regulatory reset. The broker expects FY27 turnover of INR216t, up 16% year on year, with NSE listing adding cash volume and BSE holding over 30% market share in premium turnover.

Analyst inference

What to watch

1. The partial reversal of the regulatory measure takes effect on 7-Dec-26, which the broker calls a catalyst for turnover recovery beyond the current volatility-driven spike. Confirmed
2. Motilal Oswal's Rs 4000 target assumes a 40x price-to-earnings multiple on FY28 estimated earnings and an upgrade to BUY, both of which are the broker's own projections. Proposed
3. Watch whether the premium-to-notional ratio converges toward NSE's 20bp-plus level from about 14bp, since that fee convergence, not just volume, drives the extra profit upside. Analyst inference

Evidence

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