Bombay Stock Exchange Limited.
- Reiterate Buy: 860/-
- Target: 1280 /-
- Holding Period: 6 Months.
BSE (formerly known as Bombay Stock Exchange Ltd.), is Asia's first & the Fastest Stock Exchange in the world with the speed of 6 microseconds and one of India's leading exchange groups. The bourse was established as "The Native Share & Stock Brokers' Association" in 1875. Over the past 141 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient capital-raising platform. With over 5800 companies listed on the main board, it is the largest exchange by a number of listed companies. Today BSE provides an efficient and transparent market for trading in equity, currencies, debt instruments, derivatives, mutual funds.
BSE provides a host of other services to capital market participants including risk management, clearing, settlement, market data services and education. It has a global reach with customers around the world and a nation-wide presence. BSE systems and processes are designed to safeguard market integrity, drive the growth of the Indian capital market and stimulate innovation and competition across all market segments. It also has a platform for trading in equities of small-and-medium enterprises (SME). India INX, India's 1st international exchange, located at GIFT CITY IFSC in Ahmedabad is a fully owned subsidiary of BSE. BSE is also the 1st listed stock exchange of India. It is also the first Exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2- 2002 certification for its On-Line Trading System (BOLT). It operates one of the most respected capital market educational institutes in the country (the BSE Institute Ltd.). BSE also provides depository services through its Central Depository Services Ltd. (CDSL) arm.
BSE's popular equity index - the S&P BSE SENSEX - is India's most widely tracked stock market benchmark index. It is traded internationally on the EUREX as well as leading exchanges of the BRCS nations (Brazil, Russia, China and South Africa). BUSINESS: BSE source of revenue are Listing & corporate fees, transaction charges and depositary charges. It also earns from data selling and treasury income. Among this, transaction charges depend upon the market condition whereas listing & corporate fees are stable and annuity income for the company. Other income is a significant part due to a high level of cash and investments.
Recently BSE has further monetized its stake in CDSL in accordance with the regulatory requirement to 24% from recent IPO since then CDSL become an associate company. Its 24% stake will continue to add value to the company. BSE promoted India International Exchange (India INX) commenced operations in January 2017. India INX provides state of the art electronic platform to facilitate trading, clearing and settlement of the widest range of global benchmark products across all major asset class, including securities, equity derivatives, precious metals, energy, agricultural commodities, interest rates, currencies etc.,
|FINANCIAL HIGHLIGHTS:||FY 2016||FY 2017||FY 2018|
|Total Income Crore||670||618||698|
|Net Profit Excluding CDSL Gain Crore||132||179||237|
|EPS Before Extraordinary Income Rupees||31.7||35.1||43.8|
|Book Value Rupees||469||488||580|
BSE Ltd is the oldest stock exchange in Asia and currently holds the global No.1 ranking in terms of highest number of companies listed, and rank No.10 in World by market capitalization. BSE is a professionally managed with the capable management team. With diverse revenue source, the management team is trying hard to improve its market share in equity. The company has 13% market share in Equity cash while in currency and interest rate derivatives it has 46% and 41% respectively. In emerging segments like Mutual Fund business, it has 76% market share through its STAR MF platform. With equities as an asset class is getting more acceptances among Indian savers the scope for a higher transaction in stock exchanges and mutual fund platform is high.
It has a strong balance sheet with huge cash and bank balances which implies higher other income will continue in future. Due to surplus cash in a balance sheet, the company is doing the market buyback of its own shares. Till Date Company has bought back 16.79 lakh shares at an average price of 815 and has used 82.5% of its earmarked buyback amount. Dividend payout is expected to be good in coming years as a capital requirement in future is less. Also, BSE has applied for commodity exchange business and likely to start in latter part of the current financial year once it gets approval. Since our last recommendation in last year, the stock has corrected and currently, BSE is trading around 20 times trailing twelve-month earnings which appear cheap considering its growth potential and cash in a balance sheet. We expect profitability from core business to improve consistency in coming years and advise investors to average their buy at the current rate.
|Shareholding Pattern as on March 2018||Percentage|
|Public, TM & others||56.42|
|FACE VALUE Rs.||2|
|Book value Rs.||580|
|Market Price Rs.||860|
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