BSE (Bombay Stock Exchange)- Bet on Financialization?


(Ghanisht Nagpal) #235

Earnings yield is a perfectly good way to value stocks for those who do it, its exact reciprocal to P/E.

I did not understand your logic, saying that RISK is negligible there at current price is a very arbitrary statement on your part. I think @AmitContrarian is just being his namesake, a contrarian.

Thirdly, please don’t be judgement about criticism of your stock, as far as your question goes on what basis one will invest, there are multiple parameters to it, some of which are too trivial for this forum’s standard.

Dis. Holding BSE as 4th largest position


(AmitContrarian) #236

Please enlighten us with your way to doing its valuation ?
I am trying to ask how would you value this business ? and What is your expected return from it ?

So, i adjusted earning yield on cyclicality its coming out to be PE = 22 i.e, 4.5 % . Is this acceptable to you as long term return ?
They give out everything as dividends its FCF -ve, cumulative CFO since 2010 is just Rs 67Cr i.,e they give out everything else dividends. Nothing going into reserves , which is okay considering already the amount of cash they have.

You have 4th largest position , i hope you will be able to justify me why it’s worth buying today.

What should be the expected return from your point of view ?

PS : sorry if i am asking below standard questions, Feel free to report it to admins.


(sambandham82) #237

Please dont misunderstand and make personnel remarks. we are here to discuss only equity fundamentals.


(devarshi84) #238

From the limited research that I did, I have come to the conclusion that BSE has begun heavy transformation (MF and msme trading) and diversifications (CDSL) only in recent years and the fruits of the same are yet to be seen in the next few years.

Their current business generates heavy cash flow and the company is good at rewarding investors with good dividend but growth is competitive but limited unless constant innovation takes place. If not operated properly, this might just turn into another high dividend, flat business stock.

Also, I assume that the recent carnage in Small/ Micro cap where the number of trades are much higher and the LTCG tax implications also put stress on the Q1 numbers.

Disc: Invested and may add more as and when I find a positive trigger.


(AmitContrarian) #239

Thanks @devarshi84 - you gave me a reason worth seeking - let see how big is the potential with Start MF. btw NSE also has similar platform, I think BSE has 60% market share. ( correct me if i am wrong )

Star MF is going to generate around Rs 20 of profits this year (Q1 they generated Rs 5 Cr /-) (if M.F flow remain good ) . which is like 10% of overall profits.

How big it can grow ?

Data from MF tracker Value Research reveals the share of direct assets, up from 15 per cent to 40 per cent between FY13 and FY 17, had dropped to above 38 per cent.

04%20PM

The awareness level is increasing drastically,” said Kunal Bajaj, founder & CEO of Clearfunds. He observed while people were not willing to pay a big amount as advisory fee, they would be willing to spare the smaller amounts the platforms charge. This makes it viable for firms such as his that use automated robo-advisory services and do not hire financial advisors to chalk out portfolios for individuals. He believes such personalisation might be required for only certain customers. Dhirendra Kumar said independent financial advisors and distributors might be adversely affected by such low-cost offerings, though investors might benefit. With big players like Paytm yet to launch, direct plans could well receive more of a boost in future.

Very rough calculation just to see how big Start MF can be -
So, Today with 40% market share of Direct - The StartMF platform is earning Rs 20 Cr yoy, Lets say if this becomes 80% market share ( very bullish scenario ) in 5 years, and BSE Star able to maintain its market share then it will make Rs 40Cr /- out of it ?

Now MF flow and all is subjected to market sentiments and ETFs ( if more and more people start indexing) etc .
But considering everything same as today , we should realistically expect around Rs 40Cr at max from this platform, which is like 25% of net profits.
May be it has the potential to contribute 5% growth ( Rs 10 Cr ) to the net profits (Rs 200 Cr) for 4 - 5 year.

I feel not bad and not good enough also.

Thanks,
Amit


(puneetc) #240

In your calculation, you’re considering the size of the MF distribution market to remain same over the next 5 years, which in itself is wrong.
On the other hand, I don’t understand why there’s so much pessimism about INX! On friday, it again crossed 1bn turnover mark(70k contracts traded), which is 4-5x growth in last 1 year.
FIIs have been consistently pulling out cash for the past 6-7 quarters. Whenever the flows turn on this front (2019 elections??), I feel it could play significant role in propping up the trading at INX. In all likelyhood, BSE should start charging for trading by Q4-19.

Disc: Invested


(AmitContrarian) #241

I was just trying to prove that it’s not going to be enough alone.
Market share distribution has decreased recently due to market sentiments . So, hard to guess what’s going to happen in 5 yrs.
Also , in west everyone moved to indexing , etfs etc . So u never know M.F will remain preferred destination for retail or not.

Today it’s free on INX - even if u try to calculate based on transaction fee Ashish mentioned in earning call it’s not enough.
Somebody did calculations above as well.


(Abhinav Mehrotra) #242

BSE STAR MF offers both direct and regular plans of MF schemes to its customers. Taking only direct plans as a % of MF AUMs does not give full picture.

Reference:
https://www.bseindia.com/Static/Markets/MutualFunds/listOfAmc.aspx?expandable=1

https://www.bseindia.com/Markets/MutualFund/MFNotices.aspx?expandable=1


(Abhinav Mehrotra) #243

Found this at the bottom of the Zerodha Coin website (https://coin.zerodha.com/), “Coin is only an order collection platform that collects orders on behalf of clients and places them on BSE StarMF for execution.”

Lets see what execution platform PAYTM Money will use for their MF distribution service.


(sagar_amula) #244

Yes thanks for sharing, I was searching for other such players but there is no consolidated list, There are many advisors like ScripBox, ClearFunds etc who charge fees for their services rather than commission, I wonder what platform these guys might be using.


(sagar_amula) #245

Also this looks interesting


(Abhinav Mehrotra) #246

Found Upwardly which uses BSE STAR MF to process all orders.


(saumya) #247

Extension in trading hours for equity


(AmitContrarian) #248

Is payTm Money built on BSE STAR platform ?

since launch some 8 lac users registered on it https://www.paytmmoney.com/


(Gnana) #249

As per my understanding, BSE STAR platform used by AMFI registered MF distributors,independent financial advisors and other to manage their client’s transactions and AMCs and others pay BSE for these services.

I think paytmmoney directly works with AMCs systems/APIs to facilitate the users to buy or sell MFs. No information on whether AMCs will pay paytm for bringing in the additional users and business.


(Akansha17) #250

Mutual Fund holdings of BSE has shown a decrease in the month of July’18 and June’18

Source: https://www.rupeevest.com/Mutual-Fund-Holdings/207901


(AmitContrarian) #251

The same idiots were buying it expensive after IPO … today they r pouring in to few concentrated stocks again at high valuations.
I don’t think looking at what M.F doing makes any sense.
Plz try looking at what business is doing ? I don’t think u’ll be able to tell me any bad news.
So, the guys (m.f) who did buy high sell low stuff are just not worth analysing.


([email protected]) #252

In agreement as to what MFs do. Their buying and selling would also depend on fund inflows and redemption pressure.

Added few shares today.

Regards


(Sreekanth) #253

With growing volumes in the platform this opens up a very good source of revenue monetization. Will be interesting to see how Paytm comes up with monetization of its platform which is seen as a competitor to BSE starmf…

Interesting move here again… though my concerns are if BSE has got its hands too full by trying too many things at the same time…


(devarshi84) #254

BSE is keeping itself in the news with a lot of potential plans but the stock price has not reacted accordingly and touched 52-week low today.

While not trying to discuss the stock price, I would definitely want to know why the stock has taken such a beating this year. Is there something on the balance sheet that I might be missing?