Stock of this exchange and data platform firm has zoomed 114% in 9 weeks

Shares of BSE hit a new high of Rs 1,945.90 today and have rallied 23% in the past six days after revision in transaction charges for Sensex Options, effective from November 1

Shares of the Bombay Stock Exchange (BSE) rose 2.5 per cent on the NSE to hit a new high of Rs 1,945.90 in Tuesday’s intra-day trade. In comparison, the Nifty 50 index was down 0.24 per cent at 19,095 at 10:34 AM.

In the past six trading days, the stock of the exchange and data platform company has rallied 23 per cent after it announced the revision in its transaction charges for Sensex Options, effective from November 1.

The exchange said the charges for all other equity derivative contracts would remain unchanged. 

These changes will primarily be levied on BSE Sensex Options, particularly the nearest or immediate expiry contracts, according to BSE notice dated October 20, 2023.

The new transaction fee structure is based on the incremental billable monthly turnover (premium value).

After revision, transaction charges for Sensex Options will start from Rs 500 per crore for up to Rs 3 crore monthly turnover. 

The highest charge will be Rs 3,750 per crore for monthly turnover between Rs 3 crore and Rs 100 crore. Read details here

The shares of BSE have seen an exponential jump since the relaunch of the Sensex and Bankex derivatives contracts in May with smaller lot sizes and weekly expiries.

Since August 28, the stock price of BSE has more than doubled or zoomed 114 per cent.

In the past four months, it has skyrocketed 220 per cent. Thus far in the calendar year 2023, the market price of BSE has surged nearly 250 per cent, as compared to a 5 per cent rise in the Nifty 50.

BSE is consolidating on its newly-found traction in equity index options segment. Volume growth has been stellar in Q2FY24 (index options average daily turnover (ADTO) in Sensex moved from almost 0 in May’23 to Rs 26 trillion in Sep’23), said ICICI Securities. 

Now pricing has also improved substantially (Rs 50/mn of premium turnover in Apr’23 to around Rs 260/mn on weighted basis as per notification in Oct’23).

Second half may witness traction in new products (Bankex) and new distribution channels (large brokerages may add BSE product offering), the brokerage said. 

Going ahead, it expects BSE’s options turnover to increase 9 per cent every month in H2-FY24. This would translate to Rs 20 trillion average daily trading volume (ADTV) for FY24E and exit ADTV of Rs 44 trillion in Mar’24E.

“In FY25E, we expect BSE options turnover to grow 8 per cent every month which would translate to Rs 68 trillion ADTV and exit ADTV of Rs 95 trillion in Mar’25. Basis Rs 20/68 trillion index option ADTV in FY24/FY25E, our option revenue estimate for BSE stands at Rs 1.2/5.8 billion in FY24/25E. We factor average realisation of INR 200/300 per mn of premium turnover for FY24/25E with premium as 5bps of notional turnover,” it said. 

Meanwhile, according to HDFC Securities, BSE is expected to report a strong quarter, led by robust market activity and derivatives revenue contribution of Rs 5 crore.

Revenue will grow 19 per cent QoQ with an EBITDA margin of 41 per cent in July to September quarter (Q2FY24). Derivatives will not contribute anything to EBITDA in the quarter due to higher clearing costs, it said. 

The board of directors of BSE is scheduled to meet on November 10, to consider and approve the unaudited financial results of the company for the quarter and half yearly ended September 2023 (Q2FY24).