Buy BSE, Nuvama says, but cuts price target by 30%

Shares of the Bombay Stock Exchange (BSE) Ltd. are trading with losses on Monday, March 10, after brokerage firm Nuvama Institutional Equities cut its price target, while maintaining its ‘Buy’ recommendation on the stock.The price target on BSE has been cut to ₹5,160 from ₹7,250 earlier by Nuvama. The revised price target implies a potential upside of 23% from Friday’s closing levels.
Shares of BSE have already corrected by 32% from their recent record high level of ₹6,133.40.
NSE has changed expiry day for its derivative contracts to Monday, which is one day prior to that of BSE.Nuvama, in its note, argued saying that this would lower volumes for industry as trading avenues for retail traders, who are typically more active closer to expiry, will reduce.

BSE’s index option premium market share shot up from 16.4% in December 2024 to 22.1% in February 2025, mainly due to BSE revising the expiry day to Tuesday from Friday.

On March 4, the NSE announced a revision to its index option expiry day from Thursday to Monday (one day before BSE’s expiry). This move will potentially help NSE reclaim its previous market share of 83.6% in December 2024.

Now, with the NSE expiry day just one day ahead of BSE’s, BSE’s potential to capture premium on non-expiry days is likely to reduce and hence overall market growth may suffer.

This shall moderate BSE’s market share to 18% from 22% in February 2025, Nuvama said.Additionally, the brokerage said that capital markets regulator SEBI’s consultation paper on derivative exposure limits may clip growth.

Nuvama has reduced BSE’s FY25, FY26, and FY27 adjusted profit after tax by 0.2%, 13.4%, and 11.6%, translating to a lower FY25–27E earnings per share CAGR of 17.1%.

Given heightened competitive intensity, uncertainty on incremental regulatory changes and reduced earnings per share estimates, the brokerage has slashed the target price-to-earnings to 40 times from 50 times earlier.

Another brokerage firm Goldman Sachs has also cut its price target on BSE Ltd. for the second time in a week. Goldman Sachs has a ‘Neutral’ rating on the stock and has cut its target price to ₹4,230 per share.

Goldman Sachs had stated that the NSE expiry day change to Monday from Thursday, with effect from April 4, is negative for the BSE options market share.

It said the change in expiry day would matter the most for weekly option contract expiries.

Out of the 11 analysts that have coverage on BSE, one of them have a ‘Sell’ rating on the stock, eight of them say ‘Buy’, while the other two have a ‘Hold’ rating.

Shares of BSE ended 1.66% lower on Friday at ₹4,183. The stock is down 23% so far for the year.