BSE shares fell sharply following a downgrade by Jefferies, which cited slowing market-share gains and regulatory risks, despite the exchange’s robust June-quarter performance.
BSE shares slid sharply on Monday after Jefferies cut its view on the exchange operator, warning that revenue growth could come under pressure from domestic proprietary traders. The stock opened weaker and quickly dropped more than 4.5% in early trade before recovering some ground, as investors weighed the brokerage’s more cautious stance against BSE’s recent earnings strength.
Jefferies downgraded BSE to “underperform” from its earlier rating and reduced its target price to Rs. 2,940 from Rs. 3,520, according to the note cited by GoodReturns. The brokerage trimmed its earnings forecasts for fiscal 2027 through 2029 by 5% to 12%, saying BSE’s market-share gains had slowed outside the near-expiry trading windows. Livemint reported last year that Jefferies had already flagged valuation and regulatory risks, saying the risk-reward profile had become less attractive as market expectations improved.
The bearish call came even after BSE posted a strong June-quarter performance. The exchange reported consolidated net profit of Rs. 874 crore, up 62% from a year earlier, on revenue of Rs. 1,566 crore, a 63% increase, helped by higher derivatives trading volumes and stronger transaction charges. EBITDA rose to Rs. 1,210 crore, with margin expanding to 77.1%, while earnings per share for continuing operations climbed to Rs. 21.22. Not all brokerages turned cautious: PL Capital kept a buy rating and Motilal Oswal Financial Services maintained a neutral view, citing the possibility that rising costs and weaker trading volumes could limit further upside.
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