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Informist, Monday, May 5, 2025

By Anshul Choudhary

MUMBAI - BSE Ltd.'s consolidated revenue is likely to decline sequentially during the March quarter, primarily due to a fall in cash market volumes and fewer initial public offerings, which impacted revenue from transaction and other fees. Despite this, the company is still expected to report a sharp rise in net profit on gaining market share in the derivatives segment, which has a higher margin.

BSE's consolidated revenue for the March quarter is likely to fall 5% on quarter to INR 7.91 billion, according to an average of estimates by four brokerages. All the brokerages expect either sales to decline on quarter or be flat. Compared to the year-ago quarter, sales are likely to rise 45%. Nuvama Wealth Management Ltd. had the highest estimate for sales at INR 8.30 billion, while Sharekhan Ltd. had the lowest estimate at INR 7.50 billion.

The fall in revenue is mainly because of a continuous decline in cash volumes, hurting its transaction fees. Its average daily turnover in cash market had slipped to INR 68 billion in the December quarter from nearly INR 98 billion in the September quarter and this decline is likely to continue in the March quarter as well.

While its cash market volumes struggled, brokerages expect higher revenue from the derivatives segment to limit the fall in consolidated sales to 5% on quarter. HDFC Securities Ltd. expects revenues from cash market transactions to fall 33% on quarter, but revenue from the options segment to rise nearly 35%.

BSE is likely to report a consolidated net profit of INR 3.73 billion, up nearly 70% on quarter and more than triple from a year ago. HDFC Securities had the highest estimate for net profit at INR 4.09 billion, while Sharekhan had the lowest estimate at INR 3.50 billion.

The sharp rise in profit is expected as the company has likely gained market share in the derivatives segment from its competitor the National Stock Exchange. Motilal Oswal Financial Services Ltd. expects BSE's market share in options segment to have increased to 37% in terms of notional turnover and 20% in terms of premium turnover, from 29% and 15%, respectively, in December.

According to Nuvama, average daily premium turnover in the options segment is expected to have grown nearly 37% as compared to the December quarter. The BSE had reported an average daily premium turnover of INR 87.59 billion in the December quarter in the equity derivatives segment.

Its profitability is likely to benefit from lower regulatory and clearing costs, along with expectations of sharp fall in contribution to the core settlement guarantee fund. HDFC Securities, which has the highest estimate for net profit, has not assumed any expenses towards the fund. In the December quarter, the BSE had made a contribution of a nearly INR 2 billion towards the fund. The Securities and Exchange Board of India had in October introduced stress testing methodologies to calculate the minimum required corpus for the core settlement guarantee fund in the equity derivatives market.

HDFC Securities expects BSE's earnings before interest, taxes, depreciation, and amortisation margin to improve to 59% in the March quarter. The company had reported an EBITDA margin of 56% in the December quarter after excluding the impact of one-time expenses towards the core settlement guarantee fund.

The company is scheduled to report its quarterly earnings Tuesday. At 1218 IST, shares of BSE on Monday traded 1.1% higher at INR 6,373 on the National Stock Exchange.

Following are the Jan-Mar earnings estimates for BSE Ltd. based on reports from four brokerage firms in descending order by the estimate of net profit in INR billion:

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Edited by Subhojit Sarkar

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