BSE (Bombay Stock Exchange)- Bet on Financialization?

(saumya) #318

(puneetc) #319

There has been a 30-35% decline in the avg daily transaction at INX in the past 8-10 days. Does this signifies that there have been talks of levying some charges and doing away with the free trading??

(devarshi84) #320

Why is the general stock trade volime tilted towards NSE? What is stopping the investors from buying shares from BSE? I did some research but didn’t find why BSE is lagging behind so much in volumes.

(Dinesh Sairam) #321

The general sense is that NSE has better order processing. This helps in reducing the bid-ask during very large purchases. But of course, BSE is the oldest exchange and has more number of stocks listed in it than NSE (At least as of today).

(AmitContrarian) #322

Its just an liquidity game mate … more people come to NSE because there is more liquidity and because more people come liquidity is always good hence better price discovery.

(devarshi84) #323

Doesn’t BSE call it’s exchange world’s fastest and most efficient exchange? How then is NSE better? Plus why would somebody consider NSE over BSE. Why not bid at both exhcanges?

Just trying to understand the ground reality as I am not comfortable with the difference of daily trades between the two.

(Dinesh Sairam) #324

BSE still has the better order processing speed (6 ms), one of the fastest in the world. But that’s not what I intended to mention by “better order processing”.

NSE is famous for introducing F&O Trading in India well before BSE. They were also quicker to offer more and more trading platforms earlier than BSE. So, even today, many traders prefer NSE to BSE. In effect, on any given day, NSE has multiples times the trading volume of BSE. During large purchases, this helps the buyer a lot because of very narrow bid-ask spread. So, the biggest purchases are often done at NSE.

The advantage BSE has is that many stocks are still listed only in BSE and not on NSE. So buyers will be forced to buy it from there. But this gap will close fast, as companies tend to list themselves on both exchanges eventually.

(AmitContrarian) #325

Finally the price has reached the intrinsic value i have been looking for , This was based on 7% discounting rate and average 150 Cr profits per year ( cyclically adjusted ) and 3% growth for 10 years.

Looks like value buy ? what you guys think.
Also, have we settled the debate related to -ve OCF ? is it mainly due to interest income earned is not included.

(Shailesh) #326

Value lies in eye of beholder …

BSE is more a bet on jockey than current business … Risky but that is the truth …

You need to take in account following facts and take call … Current Numbers will not indicate future earning capacity

Equity Cash Market he has not been able to reverse the market share decline …
Equity Derivatives market - He has decided he cannot win that battle so he exited

So he has focus on currency , Mutual funds and international exchange … Time will tell how much he can succeed in those segments .

Now Another area he looks to develop is Data centre / Data analytics – which is interesting for company ( esp ) SME to outsource and users to access …

(Sanjeevani1) #327

Not to forget the fantastic dividend yield which BSE at current price offer, with downside risk protected more or less, revenue stability it can be a secular business to hold. Also once the volume in commodity needs to be watched.

(Rezang La) #328

My two cents…

Downside comfort: Owned funds (Cash&Bank + Current Investments) amount to 2318 Cr.These nos. are from the Sep. 30 balance sheet, and DO NOT include deposits / margin money from brokers. Adding the value of the 24% stake in CDSL (after a 40% holdco discount), the value comes to around 2650 Cr. Contrast this with the current MCap of around 3050 Cr. The dividend yield and the management’s willingness to consider buybacks (they just completed one round) add further comfort.

Key downside risk: BSE is a professionally managed company with no promoters. The original promoters – the trading members – held 36% as of Mar. 31, 2017. They now hold 23%. Many of these shareholders are, IMHO, likely to keep selling in the months and years ahead.

(sambandham82) #329

Also it gets a rental income of 15.36 Cr which is probably from Phiroze Jeejeebhoy towers. If one assume a rental yield of 4%, the asset can be valued 384 Cr. So 2650+384 = 3034 Cr. But the tower may be worth even double this assumption.

(AmitContrarian) #330

I don’t want to buy this argument of calculating all its CASH + INVESTMENT + CDSL + BUILDING - This will never get realized and reach to minority shareholders, it makes sense when you have the ability to buy out whole company and liquidate some of it to make quick bucks.

End of the day what matters is earning power of this company, which to be honest is dismal. 40-50% of the earnings comes from the Bond portfolio it holds then reset of the earnings comes from highly cyclical businesses in which some might not grow like the pure exchange business.
We don’t know what holds for MF start , INX , EBIX , SME etc many of them may fail.

then it’s not trading cheap as well , now finally its trading near its intrinsic value.

(devarshi84) #331

BSE starting Futures and Options of BSE BANKEX and has rec’d SEBI approval for same.

(saumya) #332

(saumya) #333

(Raghu) #334

Concall transcript

(Ashish) #335

Thanks Raghu…

Interesting line from Ashish Kumar Chauhan: I’m telling you, that if, mutual fund was a separate
business, and coming out of Bangalore, many of you would have given it few billion
dollars of valuation. It is – because it is in BSE. Today, BSE’s market capitalization is lower
than value of the assets in hand, right? So that is how this things work.

So true…

(dprashant) #336

Seems His incentives are directly linked to Market cap of company ::))

([email protected]) #337

Clearly worring signs
Why is he getting frustrated with analyst.I remember he got frustrated with other analyst 2 quarters back!!!
The bottomline BSE is not reporting earnings growth.