MOSL : BSE: In line revenue, PAT misses our estimate due to a MTM loss
. BSE: In line revenue, PAT misses our estimate due to a MTM loss
(BSE IN, Mkt Cap USD1.2b, CMP INR687, TP INR680, 1% Downside, Neutral)
- BSE reported an operating revenue growth of 13% YoY (down 10% QoQ) to INR1.7b in 1QFY23. Revenue was broadly in line with our estimate.
- Operating expense stood at INR1.3b in 1QFY23, 2% higher than our estimate, on account of higher technology cost.
- PAT fell 23% YoY and 44% QoQ to INR400m in 1QFY23.
- While BSE has multiple levers for growth from a surge in Star MF revenue to scale up of operations in new areas such as INX, Power Exchange, Spot Gold, among others, we find valuations fair at 32.4x FY24E P/E. We maintain our Neutral rating.
Lower investment income impacts performance
- Income from transactions stood at INR538m, down 8% YoY and 23% QoQ.
- Services to corporates surged 22% YoY and 2% QoQ.
- The Star MF platform grew 52% YoY, but remained flat sequentially.
- Investment income stood at INR247m (est. INR350m), a decline of 25% YoY and 40% on account of MTM losses on investments.
- EBITDA margin stood at 26.1% (est. 27%). PAT stood at INR400m (est. INR557m) on account of a lower share of associates at INRINR109m (est. INR169m) and a higher tax rate in 1QFY23.
Key highlights from the management commentary
- Revision in its listing fees, with effect from Apr'22, is translating in a better growth in listing fees.
- It launched its Power Exchange on 6th Jul'22. It began with the Contingency Market segment, where it has already managed to gain 20% market share. In the last week of Jul'22, BSE launched other market segments such as Green Contingency contracts. Currently, it is offering promotional discounts to participants.
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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