Pranurja’s petition is winding its way through the CERC.
Status May19.pdf (1.1 MB)
Pranurja Solutions is a company formed by PTC India, BSE & ICICI Bank to launch and operate a Power Exchange.
CERC’s license is required for the same; Pranurja had applied for such a license in September 2018.
Find enclosed presentation on BSE investment idea. The main factors to consider are as under:
Experience of survival in three centuries. Also seen full life cycle, i.e. in 1946 being second largest stock exchange, moving to early 1990s with dominant exchange and slowing losing market share to NSE. Today BSE is a very small player with only around 9% market share in Cash equity market and nil in Equity Derivative market. It would be interesting to observe whether BSE is able to get back its mojo and repeat what it achieved in 1960s.
While the network effect is increasingly making regaining market share in equity trading for the BSE, the newer market BSE has performed reasonably better. It could be due to also limited attention by other players, as revenue contribution at current level of activities being too small for the competitor to make difference. With very limited income from Stock trading and small scale, these income streams may make material difference to BSE. However, given the very dominant position of NSE, it would be interesting to see whether BSE able to manage its market position in those area once NSE become aggressive.
The core business of exchange related income is like small /micro cap index reflection for BSE. Given the past return in small/micro cap company, it would take time of around 1-2 years for BSE to register major growth in earning. However, other stable income fees like listing fees, Data service, Income from investment would continue to provide for cash to maintain dividend (may decline marginally in next although).
The newer ventures in Gift city, MF distribution, Common margin for exchanges and CDSL holding, may provide for wealth creation in very long term if managed and nurtured well. So in my view, BSE is like option, where I get fixed return of around 4-5% of investment, with very long term optimality to gain from success of multiple new initiatives.
The major risk for BSE being constant loosing market share vis NSE. Today NSE is able to generate almost 10 times cashflow as copared with BSE with nearly 40% of number of listed companies. In Equity Derivative business, NSE is monopoly. If situation coninue to remain same, BSE may end up with marginal player with no growth and Cash flow also continue to decline from existing line of businesses. Listing companies over period have constantly decline in BSE due to non-compliances, liquidation and regulatory supension. Also, Stock exchange as business have major impact of Network which is currently with NSE and against the BSE in my opinion.
Please read my disclosure at the end of presentation about my interest in BSE.
BSE Investment Idea June 2019.pptx (202.5 KB)
anyone has the link to the latest earnings call transcript? cant seem to find It
Any views on the status of the buyback post the budget proposal? Any chances it could be canceled?
Useful thread on Twitter by bikoo on ForEx markets. Highlights many aspects of ForEx trading on exchanges ((NSE + BSE).
Did anyone from the forum attend the AGM yesterday?
In the meantime India INX average volume nearly tripled last two months… Now that gold is also active expecting commodity futures turnover at INX also to go up. BSE is doing all things right… They now have good/equal market share in currency derivatives ( it was zero in 2014 ), Bonds, mutual funds, IR derivatives and commodity derivatives. But somehow cash market and stocks derivatives eludes them… I really cant understand the reason. Now the interoperability is kicking in, I do hope BSE gain some market share.
I raised this question long ago but unfortunately discussion got diverted, I feel now BSE might be trading around its intrinsic value but i still don’t feel like buying it at intrinsic value as it will yield 8-9% at this valuation.
At price Rs 650 /- share, it was yielding 6.4% or there about.
Simplistically put if you buy BSE with ROE = 10% at book value and you should not expect them to return you more than 10%, until unless assets starts producing more ( which i doubt.)
A few observations on the current vs previous buyback-
The current buyback is through a tender offer process while the last one was through open market acquisitions through the stock exchange.
The management would have created more value for the post-buyback holding shareholders if they had gone through the open market route. They would have been able to extinguish outstanding shares at near the CMP +10-15%. In the previous buyback, even though the price they were ready to buy at was up to 1100, they ended up with an average buyback price of 822.
The size of the recent buyback is almost 3x the previous one, ie., 460 cr. Perhaps the reason for going for the tender process was that the buyback would have cornered the entire daily liquidity of the stock. The average 1 year and 2 years daily turnover in the scrip is at 6.5 cr and 10 cr respectively. If they bought 2 cr every day it would have taken them a whole year of trading days to complete the buyback.
If issue was Rs 800 odd and buyback is at Rs 680 - so what will be buyback tax ??
Negative tax 
What you are talking about would be classified under (ST/LT) Capital Gains for the selling shareholders. Buyback tax is paid by the company.
I was talking about Buyback tax in current budget to be paid by companies that do buyback .
How it is calc . ( Buyback price - Issue price ) x 20% … Right
Acc to this article BSE has to pay 12cr as tax for the buyback. I have no idea how it is calculated though.
If i buy today , will i be eligible for buyback ?
Most probably, yes. For that delivery should happen before Monday, which may or may not happen sometimes.
its T+2 , working days not sure if Saturday is working day.
I guess not.
Just a thought,
With the recent debt listing of REC debt and other issuers in GIFT IFSC. Would India’s new sovereign foreign borrowings be also listed in the same way? It could be the start of a good segment for INX and BSE.
That would be wonderful, no doubt. But I think government will list them in both ( NSE IFSC and in BSE INX) as REC did.
Regulatory compliance was pretty bad in the past and that lead to the pro NSE stand by the authorities. But looks like things are changing in favour of BSE ( Interoperability for example). From Monday interoperability in derivatives also kicking in. I do really hope that BSE picks up volume in derivatives.
Today INX did a record high turnover today. For the first time INX crossed 4 Billion turnover and its 4.8 Billion dollar so far.
