Shares of the Capital Market stock surged 3 percent following UBS’s optimistic forecast, which highlights significant upside potential for the company. The positive outlook from the global financial services firm has bolstered investor confidence, driving the stock price higher and signaling strong growth prospects in the coming months.
Price Movement
During Monday’s trading session, shares of BSE Ltd jumped to an intraday peak of Rs.4,025.00 each, reflecting a 2.5 percent increase from the prior closing price of Rs.3,926.25 per share. However, the stock retreated later and closed at Rs.3,969.05 apiece. Over the past five years, the stock has delivered over 3,700 percent returns.
What happened
Global brokerage firm UBS has initiated coverage on BSE Ltd. with a ‘Buy’ rating and a target price of Rs.5,350 apiece, as of March 17. This target implies a 35 percent upside potential from current market price. UBS highlighted the growth in options turnover as a key driver for BSE and noted the company’s diverse revenue streams, with operating margins expected to improve.
The brokerage also sees potential upside if the approval of a common contract note materializes. Despite BSE’s valuation currently being 33 times its one-year forward price-to-earnings ratio, an 11 percent premium to its average, UBS believes historical valuation multiples are less relevant due to the company’s revamped business model.
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Earnings Report
According to its recent financial updates, BSE Ltd reported remarkable consolidated revenue of Rs.832 crores in Q3 FY25, marking a 95 percent increase from Rs.426 crores in Q3 FY24. In addition, the company saw a surge of 106 percent in net profit to Rs.219 crores, compared to Rs.106 crores in the same period last year.
Ratio Analysis
The company has a Return on Capital Employed (ROCE) of 29.7 percent and a Return on Equity (ROE) of 22.31 percent. Its Price-to-Earnings (P/E) ratio stands at 56.63, higher than the industry average of 50.4. Furthermore, the company maintains a current ratio of 1.24, a debt-to-equity ratio of 0, and an Earnings Per Share (EPS) of Rs.69.33.
Business Updates
The platform has over 204 million registered investors, with an average daily trading volume (ADTV) in equity cash of Rs. 85,355 million. The total contracts traded in equity derivatives (EQD) amount to 25.4 billion, while the average daily turnover in EQD is Rs. 110 trillion. Additionally, mutual fund orders stand at 484 million, with an order value of Rs. 7.58 trillion.
Written by – Siddesh S Raskar
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