Up 681% in 3 years! Has BSE stock peaked for now? Goldman Sachs initiates coverage with 'neutral' rating

Foreign brokerage Goldman Sachs has initiated coverage on Bombay Stock Exchange (BSE) Ltd. with a 'neutral' rating and a price target of Rs 5,060. The rating reflects a one per cent downside from the stock’s previous close. According to the brokerage, while BSE is poised to benefit from strong growth drivers in India’s equity markets, the current valuations have reached a point where risk-reward appears balanced.

Goldman Sachs noted that the stock is trading near all-time highs, in alignment with global peers. Robust nominal growth in the earnings of Indian listed firms and an expected 11 per cent compound annual growth rate (CAGR) in cash average daily turnover (ADT) were highlighted as key tailwinds for the company.

Margin expansion potential in the options segment

The brokerage emphasised that reforms in options clearing could significantly boost profitability. Lower clearing charges could enhance EBITDA margins by 10 per cent and improve return on equity (RoE) by 5 per cent. Additionally, the firm projects that BSE’s market share in the index options segment could rise to 17 per cent.

Contrasting views from other brokerages

Earlier, Jefferies downgraded BSE shares to 'Underperform' from 'Hold', citing unfavourable risk-reward dynamics despite raising its price target to Rs 3,500. The downgrade followed a sharp rally in BSE shares after SEBI introduced new regulations for F&O markets, boosting expectations of market share gains.

Stock performance and analyst recommendations

BSE shares, which have more than doubled in the last year, ended Friday's session at Rs 5,123.80, marking a 1.56 per cent decline. With a market capitalisation exceeding Rs 69,000 crore, the stock’s Relative Strength Index (RSI) of 45.5 suggests neither overbought nor oversold conditions.

Of the nine analysts covering BSE, five recommend 'Buy', while two each have 'Hold' and 'Sell' ratings.

With valuations nearing their peak, BSE shares appear to offer limited upside. While growth drivers remain intact, the stock’s alignment with global valuation benchmarks signals a cautious outlook for investors.