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Synopsis:Shares of BSE Ltd. saw an 8% increase after SEBI introduced proposals aimed at curbing retail speculation in derivatives. IIFL Securities noted that BSE currently trades at 26 times its estimated FY26 earnings per share (EPS). However, if SEBI's proposals lead to a 25% cut in earnings, the stock would trade at 34 times FY26 EPS. IIFL anticipates BSE's earnings to grow at 15% annually over FY26-28 and suggests that the stock may stabilize at 30 times the revised EPS of Rs 70. The brokerage also highlights a greater earnings impact on NSE compared to BSE, with discount brokers expected to be more affected than traditional brokers.
BSE Ltd. shares climbed 8% in Wednesday's trading session, reaching a high of Rs 2,607.70, following SEBI's proposal of seven measures designed to reduce retail speculation in the derivatives market. According to domestic brokerage IIFL Securities, BSE trades at 26 times its forecasted FY26 EPS. Should SEBI's proposals result in a 25% earnings reduction, the stock would then trade at 34 times FY26 EPS.
IIFL Securities predicts that after adjustments, BSE's earnings will grow at a compounded annual growth rate of 15% from FY26 to FY28. The brokerage believes the stock could bottom out at 30 times the revised FY26 EPS, which is estimated at Rs 70. For now, IIFL is maintaining its base estimates and awaiting further clarity on the final regulations.
When assessing the impact on earnings, IIFL Securities anticipates a greater effect on NSE, as options are expected to contribute 60% of NSE's revenues in FY25 compared to 40% for BSE. The brokerage forecasts a 15-18% impact on BSE's FY26 earnings, whereas NSE could see a 25-30% impact. Additionally, IIFL mentions that discount brokers may be more affected than traditional full-service brokers due to their reliance on retail investors.
Another SEBI consultation paper on the return of interest income on margin money is expected to have a more significant impact on BSE (10%) than on NSE (4%), IIFL Securities added.
"Our earnings impact calculations are based on initial assessments, which we will refine as more information becomes available on the potential effects of the proposed measures," IIFL Securities stated.
Disclaimer: This information is intended for educational and informational purposes only and should not be considered financial or investment advice. Readers should consult with a qualified financial advisor before making any investment decisions.
