Goldman Sachs has initiated coverage on BSE with a “Neutral” rating and a target price of ₹5,060, highlighting the company’s exposure to strong growth drivers in India’s equity capital markets. BSE’s fixed-take-rate business model, based on value traded, positions it to benefit directly from nominal growth in Indian listed corporate earnings, which fuels its equity trading revenues, accounting for 60-70% of the company’s total revenue.
The brokerage expects an 11% CAGR in cash average daily turnover (ADT) and a rise in BSE’s index options market share to 17%, aided by options reform and lower clearing charges. These factors are anticipated to contribute to a 10-percentage-point expansion in EBITDA margin and a 5-percentage-point improvement in return on equity (ROE) over the medium term.
However, with BSE’s valuations near all-time highs and its price-to-earnings-to-growth (PEG) ratio in line with global peers, Goldman Sachs believes the risk-reward remains balanced, warranting the “Neutral” stance.
