MOSL: BSE (Buy)-Strong beat led by higher market share
BSE: Strong beat led by higher market share
(BSE IN, Mkt Cap USD0.9b, CMP INR1417, TP INR1800, 27% Upside, Buy)
- BSE reported a strong operational revenue growth of 42% YoY in 2QFY22. The revenue beat to our estimate was led by a 15% YoY increase in equity transaction charges on account of strong volumes and market share gains.
- Revenue from the Star MF platform rose 22% YoY in 1HFY22. Overall volumes (number of orders) saw a 99% YoY increase in 2QFY22. BSE continues to command strong market positioning. The management is open to monetization of the Star MF platform via sale to a strategic investor.
- BSE saw its market share increase in both the cash equity and derivatives segments in 2QFY22, which it attributed to interoperability by some of brokers and listing of IPOs. The management expects a gradual increase in market share, which will drive equity volumes for the company.
- Cross-subsidization by competition presents limited monetization opportunities for BSE in INX and the commodity derivatives segment in the near term. While the announced additional income streams may be small currently, some of these have the potential to present a meaningful opportunity over the long term (for instance, Star MF was in investment mode for almost a decade).
- We continue to view BSE as a tactical play on its core business and potential value from a scale-up in revenue in new segments (Star MF, Commodities, and INX). Increased margin would further add to profit on account of high operating leverage. We reiterate our Buy rating.
BSE Limited (BSE) is an India-based stock exchange company. BSE provides a transparent market for trading in equity, debt instruments, derivatives and mutual funds. The Company consists of two business segments: Stock Exchange activity and Depository activity. Stock exchange activity is engaged in facilitating trading of securities and the activities incidental there to, and Depository activity provides depository-related services. It also has a platform for trading in equities of small and medium enterprises (SME). BSE also provides various services to capital market participants, including risk management, clearing, settlement, market data services and education. The Company's subsidiaries include Marketplace Technologies Private Limited, Central Depository Services (India) Limited (CDSL), Indian Clearing Corporation Limited (ICCL) and CDSL Ventures Limited. The Company offers the SCORES system, which is a Web based system where investors can lodge their complaints online.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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