BSE stock to buy: Brokerage SBI Securities suggests buying the Bombay Stock Exchange (BSE) stock, one of the oldest and largest stock exchanges in the world. BSE is also the fourth largest derivatives exchange in the world in terms of number of orders processed.

Why SBI Securities bullish on BSE stock

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The brokerage has given five reasons to buy BSE stock for the long-term. According to it, the stock exchange's transaction charges growth remained strong mainly due to derivative contracts. BSE traded 11.3 billion contracts in the equity derivatives segment, generating revenue of Rs 176 crore. We SBI Securities believes that BSE is rapidly gaining market share in the derivatives segment due to the launch of SENSEX and BANKEX contracts.

Secondly, the company has paid Rs 170 crore towards differential regulatory fees on an active basis, of which around Rs 96 crore was mainly for FY24. BSE has increased transaction charges for trades above Rs 3 crore on Banex and Sensex options to between 32 per cent to 48 per cent from May 13, which will offset the impact of regulatory fee expenses as well as clearing and settlement expenses. 

BSE Co-location is live with 100 racks and around 100 more racks will go live in a month. High colocation racks facilitate higher institutional participation. BSE plans to launch new products and services in the future. 

The market share of BSE Star MF is 90 per cent. BSE will launch a new version of BSE Star MF 2.0 platform in 2QFY25. 

At the current price, the stock trades at a P/BV multiple of 9.9x/10.3x and a P/E of 33.0x/30.2x to Bloomberg consensus estimate FY25E/FY26E earnings. High SGF cost and differential regulatory fee expense are key risks, brokerage said.

BSE stock target price

BSE stock closed at Rs 2,796.50 per share, down almost 1 per cent on Saturday, May 19. The brokerage has given target of Rs 3,231.4 each. This implies an upside of over 15 per cent from its current price.

BSE share price history

The stock has jumped over 420 per cent in one year while has given 1,000 per cent returns to its investors in three years.