Down 16% in March, BSE share price declines for fifth session amid target cuts and regulatory concerns

Shares of BSE Ltd. extended their losing streak for the fifth consecutive session on March 11, 2025, despite rising over 3 percent in intraday trade. The stock has witnessed a sharp decline of 13.5 percent in five sessions and has been in the green for only one out of seven trading sessions in March. So far this month, the stock has dropped 16 percent, following a 12.6 percent fall in February and a 0.4 percent dip in January.

Despite the recent weakness, BSE shares have gained 78 percent over the last year, highlighting the strong rally seen in prior months.

Nuvama’s Target Cut and Market Share Concerns

The recent downturn was triggered by Nuvama’s downward revision of BSE’s price target while maintaining a ‘Buy’ rating. The brokerage slashed its target price to ₹5,160 from ₹7,250, implying a potential upside of 29 percent from Monday’s closing price.

One of the primary concerns raised by Nuvama is the National Stock Exchange’s (NSE) decision to shift its derivative contract expiry day to Monday, a day before BSE’s Tuesday expiry. The brokerage noted that this change could impact BSE’s derivatives market share, particularly in the options segment, as retail traders are typically more active closer to expiry.

BSE had revised its index options expiry from Friday to Tuesday, leading to an increase in market share from 16.4 percent in December 2024 to 22.1 percent in February 2025. However, with NSE’s expiry now set for Monday starting April 4, Nuvama expects BSE’s market share to moderate to 18 percent.

Additionally, Nuvama highlighted concerns over SEBI’s consultation paper on derivative exposure limits, which could further impact trading volumes. As a result, the brokerage has cut BSE’s FY25, FY26, and FY27 profit after tax (PAT) estimates by 0.2 percent, 13.4 percent, and 11.6 percent, respectively. This has led to a downward revision in earnings per share (EPS) CAGR to 17.1 percent for FY25–27.

Given the increased competition, regulatory uncertainties, and reduced earnings expectations, Nuvama has also lowered BSE’s price-to-earnings (P/E) multiple to 40 times from 50 times earlier.

Goldman Sachs Also Cuts Target Price

BSE’s stock came under additional pressure after Goldman Sachs cut its price target for the second time this month. The brokerage, which maintains a ‘Neutral’ rating, has revised its target price down to ₹4,230 per share.

Earlier on March 3, Goldman Sachs had already slashed its price target from ₹5,650 to ₹4,880, citing potential risks to BSE’s derivatives market share. The firm echoed Nuvama’s concerns, stating that NSE’s expiry shift to Monday could be a major setback for BSE’s weekly options segment, where it had been gaining traction.

Legal Challenges Add to Uncertainty

Adding to the negative sentiment, a Mumbai court recently directed the registration of an FIR against former SEBI Chairperson Madhabi Puri Buch, two BSE officials, and others over alleged listing irregularities dating back to 1994. The case pertains to Cals Refineries Ltd., with allegations of violations in granting listing permissions.

BSE has denied any wrongdoing, stating that the officials named in the case were not in their roles at the time of the listing and had no involvement in the matter. The exchange called the allegations “frivolous and vexatious”, emphasizing that the court’s directive was issued without prior notice or an opportunity to present its case. BSE has confirmed that it is taking legal steps to challenge the order.

In summary, BSE’s stock remains under pressure due to a combination of regulatory changes, competitive pressures, and legal uncertainties. While brokerages like Nuvama and Goldman Sachs still see potential upside, their target cuts reflect heightened risks to BSE’s future growth. Investors will closely monitor how BSE adapts to NSE’s revised expiry schedule and the potential impact of SEBI’s regulatory proposals on its trading volumes.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.