BSE (Bombay Stock Exchange)- Bet on Financialization?

[ashwind]

Q4 Income was 846Cr vs 483 Cr YoY, NP was 493 Cr vs 106 Cr YoY
FY25 Income was 2957Cr vs 1371Cr YoY, NP was 1322Cr vs 771Cr YoY

Good results. Investor Presentation Link & Board Meeting, Dividend, AGM, Record Date, etc Link

• Some of the Q3 SGF was reversed due to adjustments.
• Quarterly NP is touching ~400Cr, or yearly ~1500Cr or EPS of ~100Rs. PE ratio of 63 (@6300/share) seems stretched now.
• AGM is on Aug 20th
• Dividend is ONLY Rs.18 + Rs. 5 (special dividend), total of Rs.23/share, the Record Date is May 14, payable after AGM by Sept 18th 2025. Since Record date is next week, BSE Bonus shares will not get dividend (smart move by mgmt )
• Consolidated EBITDA has grown hugely, 1778 Cr vs 608 Cr YoY.
• Lot of Cash generation have grown quite well in BS, but dividend seems to be disappointing, esp in 150th year. Are they hoarding it for any capex needs? [Edit - Why the percentage of dividends payout is lower, CEO explained that they have spent 500cr on technology related to clearing, etc and that has already given the return to that fold. Balance between 1) Customers want confidence in the exchange and its clearing facilities, 2) A strong sound balance sheet.]
• Common Contract Note - This the CEO has been stressing is needed, but I am not sure if this will benefit BSE or not.
  
  

Disclaimer: Invested. No recent transactions. Was planning to lighten earlier, might continue with that thought.

Coincidentally NSE also declared their results today - STANDALONE_CONSOLIDATED_RESULT_MAR25 & NSE Q4 Results

• final dividend of Rs. 35 per equity share
• Only 12,187Cr FY25 Profit, BSE is just 10% of this…long way to go.

[AJ41]

The numbers seems to be largely in line with the analysis made back in April. The standalone revenue has grown by approximately 10% as compared to Q3.
The numbers for the quarter will remain as a benchmark for the days to come. At this level BSE is poised to attain an annual profit in excess of Rs. 1500 crore for next FY. Market is expecting another blockbuster year 2026 which is evident from the recent share market performance.
The only concern I have at this stage is the dividend payout ratio below 25% of annual profits. Not sure why the management is retaining nearly 800 crore of profits - note that historically BSE had paid out nearly all of the standalone profits it made annually. It would be interesting to understand how managment is planning to deploy these funds.

AJ
Disclaimer: Remain invested. No recent transactions.

[Amit2saxena]

Taking away 20% market share from NSE in Options, which is its highest revenue generating and most profitable segment, means serious challenge by BSE.

This market share increase looks like continuing trend in Apr 25 and May 25. Lets see how it pans out in the future.

Valuation look stretched though.

NSE Q4 FY25 PPT for reference

Disclosure - Invested and Biased

[randomquarks]

According to NSE management in latest concall, this loss of share in options share due to change in regulations has run its course. At some point and equilibrium will definitely come. Will it be 80% or 70% or even 60%? Because it cannot be like BSE takes more than 50% from NSE.

[ashwind]

BSE Bonus Shares Record Date Notice Link

[ashwind]

To get a better perspective on Options Marketshare of BSE (other segments are kind of irrelevant due to their share being less than 10% vis a vis NSE, those are optionalities), I compiled the below data. Some observations:

• NSE market shared has dipped from 91% to 79% in last 14 months, losing to BSE
• NSE avg daily options premium turnover had dipped from 60K Cr odd to 47K Cr in Feb-25, now has recovered to 60K Cr odd levels.
• NSE peak monthly options premium turnover was 15L-16L in Jun-Jul 24. It is now at 9L-11L range.
• BSE avg daily options premium turnover has been trending upwards to 15-16K in Apr & May. May has data for only 10 trading days. Also note - Tariff war, Indo-Pak conflict had elevated VIX since Apr 1st week, so the turnover could be higher due to this factor.
• BSE on track to do 300K Cr monthly options premium turnover, might cross 10L Cr for the quarter.

Source Links -

• Link for BSE Volume : BSE (formerly Bombay Stock Exchange) | Market watch - Download
• Link for NSE volume : https://www.nseindia.com/market-data/business-growth-fo-segment

[FawaazTheInvestor]

While BSE’s historical performance has been impressive, the core investment thesis was based on the rate of change — the pace at which traders migrated from NSE to BSE, largely driven by regulatory support. That phase of rapid displacement now appears to be largely behind us.

Today, BSE has already captured close to 40% market share in terms of contracts traded, and about 35% in notional turnover. These were the more accessible milestones, as both metrics naturally tracked each other due to the similarity in contract design and the influx of traders moving platforms. This shift reflected the easier part of the transition — where low friction and regulatory nudges made it convenient for traders to adopt BSE.

However, the real challenge lies in premium turnover, where BSE’s share remains at around 25%. This is the most meaningful metric when it comes to evaluating true liquidity and depth. Premium turnover reflects where serious capital is being deployed — especially by larger, more sophisticated traders — and this doesn’t change quickly. Unlike contracts or notional, premium share improves only when the market consistently offers tight spreads, depth across strikes, and confidence in execution quality.

Given that much of the initial migration has already happened, we are now entering a phase of structural, gradual growth. Without a fresh regulatory push, the pace of change from here is unlikely to be as sharp as before. The duopoly between NSE and BSE is approaching saturation, with a 50:50 split in contracts possibly being the upper bound. From here on, any gains in premium share will be slower, and driven by operational strength and liquidity quality — not regulation.

The attached charts support this view. Would love to hear your take on how fast, realistically, BSE can gain premium market share from here. What does an Investor from here bet on?

[karanshah137]

Tough to beat NSE but BSE is Giving good Challenge

[bibhor]

I agree with you , It will be tough to improve from 25 to 30 pc but I have faith in execution capabilities of their MD Mr Murthy , On the contrary NSE management is not good as Mr Chauhan who did nothing with BSE is in NSE

My sense is by end of this year premium market share should improve to around 30 -32 pc and following year around 37-38 pc

My sense is around 37-38 pc premium market share it should stabilise

Next phase of growth shall come from increase in market share from cash segment , co - location fees , INX

[ashwind]

This artilce - Leading stock exchanges NSE and BSE in a ‘rack race’ to ramp up co-location capacities as demand soars.

BSE stopped short of maintaining the same Profit - Dividend ratio this year. I suspect now, this is related to,

1. The increasing rack space capex, and
2. More importantly Real estate where this rack space will need to be deployed. They probably will need to buy/lease something near to their current exchange servers.

[Vardhan_Shah]

Has anyone calculated the impact of contribution of equity derivatives for BSE, in case NSE opt for Tuesday expiry?

[manitmittal]

The number is not so easy to calculate. Moreover if NSE chooses Tuesday Expiry, then BSE will automatically have to choose Thursday Expiry. So they would just exchange their expiry days. In my opinion this is going to be a wasteful experiment for both BSE as well as NSE, if at all it happens. Because such frequent changes shake the confidence of market participants in their trading systems and the ecosystem as a whole. So I think the regulators will try their best to avoid this from happening.

[Vardhan_Shah]

I tried to do research, came up with some points to consider:

• NSE tried shifting equity derivative expiry to Monday, but SEBI Intervened. Post that, SEBI released consultation paper where they allowed exchanges to have either Tuesday or Thursday.
  Now, if SEBI wants to have separate expiry for exchanges, why would SEBI recommend to two days in the first place?

• Second, I was just looking into distribution of revenue for BSE in FY25, it shows that 1446 Cr. Revenue came from Equity Derivatives, as equity derivative’s cost is marginal, it translated consolidated PAT to 1332 Cr.

• BSE’s CEO seems to suggest equity derivative is moat because of separate expiry before May 2023, that was not the case, thus post that there is sharp incline in Revenue & PAT.

• NSE seems to be losing their equity derivative share shown by Q4 FY 2025 YoY decline of 9% from 6.3k Cr to 4.7k Cr. NSE CEO on record seems to be suggesting, it is the direct result of Regulation changes.

• NSE also have been loosing share from 98-99% to 80% in equity derivatives from decrementally from FY2023, this seems to align with BSE moat.

• On 15th June, there is submission of expiry for both NSE & BSE, so let’s see. Post submission for quite sometime, there can only be changes in expiry if SEBI approves it.

Source1

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Feel free to correct any pointers.

[manitmittal]

I believe post the regulation changes that took place in November last year, BSE and NSE are on a more level playing field than before. Now both exchanges are allowed to have only 1 weekly expiry, earlier NSE had an advantage with Banknifty, Finnifty, and other indices. Now I believe NSE is not loosing the market share, it’s just that the pie is getting bigger because of BSE, NSE is still growing and even more than BSE on absolute terms, but in percentage terms BSE is growing more due to smaller base. But still BSE is not yet close to NSE in terms of liquidity across strikes and expiries, so there’s a long way to go for them. BSE’s Stock Futures and Options haven’t picked up traction till now, they need to work really hard on that front as well, because NSE is growing really fast in that segment. On the other hand BSE also needs to work a lot on generating revenue from the Trading Infrastructure segment, like colocation services, etc. Simply looking by Premium Turnover in Index Derivatives, yes they are growing fast, but to sustain this growth the above deliverables are necessary.

[bibhor]

Strong start for BSE in 1st 2 days of June ; MoM Premium Turnover is up by 100 pc for 1st 2 days ; If they go up by these trend , Average Premium turnover can move significantly from 16k cr last month to 25-30K cr , this would mean premium turnover share is moving above 30 pc

If BSE can start increasing their Futures and Cash market share along with improving equity derivatives market share to ~ 40 pc , BSE market cap can go to 3L cr in 2-3 years which would still be 50% of existing market cap .

[manitmittal]

This is what I meant.

Sensex options expiry bid_ask gap

[ashwind]

We need to be cautious when extrapolating the Premium Turnover data.

In below image for June, as seen on June 4th, only the 2 trading days data was captured. “Avg. Daily Options Premium Turnover” shows 100% increase, but the reason was, Tue is expiry day when ~60-70% of the weekly Premium Turnover happens & Mon is T-1 expiry ~15-20% of the weekly Premium Turnover happens.

The same data when viewed after another 3 days, the “Avg. Daily Options Premium Turnover” moderated to single digit volume increase. Main reason is Wed & Thur are the lowest Premium Turnover days, hardly 10-15% of weekly Premium Turnover & Fri is T-2 expiry ~15-20% of the weekly Premium Turnover happens.

Out of ~20 trading days in a month, having 5 expiries versus 4 also shows a spike up, which needs to be normalised.

Best is to look at overall data on a rolling basis (atleast 30 days), Add the Premium Turnover for 30 trading days & get the average e.g. from Dec 1st 2024 to Jun 5th 2025.

[ashwind]

CASH MARKET

This is an attempt to potential changes in the CASH market of BSE, if NSDL and NSE get listed in the next 1 year. I could be very wrong with listing timeframes, actual trade volumes panning out, etc.

BSE traded value is ~2500Cr/day, it is one of the highest traded scrips. I will assume NSE being a bigger (9x) bourse, it will command similar trading volumes atleast in the initial 6-12 month period.

Description	Value	%
CSDL 3M Trading Value (Cr)	39,003
BSE 3M Trading Value (Cr)	1,46,897
CDSL 3M Daily Avg Trading Value (Cr)	661	21.0%
BSE 3M Daily Avg Trading Value (Cr)	2,490	79.0%
BSE+CDSL Daily Avg Trading Value (Cr)	3,151
BSE 12M Cash Market Daily Avg Trading Value (Cr)	7,611
Assume NSDL & NSE combined are similar volume + BSE Avg volume	10,762	41.4%
Assume NSDL & NSE combined are 2x volume + BSE Avg volume	17,063	124.2%

Plus the Futures + Options for these two scrips will be ONLY on BSE, which should further boost FNO volumes. BSE does 1000-2000Cr Futures Premium Value trade per day + a few hundred crores of Options Premium Turnover. Add some small amounts of CDSL.

I do not have adequate data points to make revenue projections, but this gives an idea why some (or maybe many) market participants are giving a re-rating boost to BSE, based on its competitor getting listed.

With all this, Once BSE equity & derivatives segments need to be activated for most active clients (maybe 70-80%), and with the introduction of the Common Contract Note, there is a high possibility that BSE will garner higher volumes. There are changes coming that gives a host of opportunities to BSE, will they grab it?

Read my LinkedIn note on Common Contract Note - Common Contract Note: A Game-Changer for Indian Securities Markets

Caution - This will take 2-3 years to fully pan out. Dont expect BSE to just linearly go to 2L-3L MCAP. It took BSE 2 years from early 2023 change of options strategy, and removal of trade incentive mindset, to reach here from 6K MCAP to 1.1L MCAP.

Disclaimer - I have a old position on this, not traded in last 6 months, but feel like exiting when seeing such a run up. The data points on traded PTO, etc keeps me invested.

[amanj86]

V v very well written and informative. Thanks for enlightening us @ashwind

[James]

BSE Ltd. shares declined over 4% after being placed under heightened regulatory surveillance aimed at curbing speculative trading activity. This measure follows a sharp rally in the stock, which has surged approximately 130% since its March low. As part of the surveillance, BSE will now require a 100% margin on trades, reflecting concerns over excessive volatility.

The stock’s recent momentum has been driven by the company’s expanding presence in India’s equity derivatives market, as well as broader market sentiment tied to the anticipated IPO of its primary competitor, NSE. However, analysts at Arihant Capital caution that BSE’s current valuation appears stretched relative to sector peers in banking and financial services. They attribute this premium to inherent risks in BSE’s business model and its sensitivity to external market developments.