BSE Shares Witness Minor Dip Amid NSE's Transaction Charge Cut; Jefferies Keeps Bullish Stance

BSE share price on NSE: The Bombay Stock Exchange (BSE) experienced a slight 1 per cent decline in its stock price in the NSE during the trading session on March 13, recovering from an earlier loss but still closing lower. This downturn followed an announcement by the rival National Stock Exchange (NSE) that it would be reducing transaction charges in the cash and derivatives markets by 1 per cent.

Jefferies Maintains a 'Buy' Rating

In response to the cut in transaction charges by the NSE, financial services company Jefferies sustained its 'buy' recommendation for BSE shares, setting a target price of Rs 3,000. This target indicates a positive 40 per cent potential from the current market prices. Jefferies addresses the earnings repercussions of NSE's transaction charge cut on BSE, predicting a 1.3 per cent impact on earnings for fiscal year 2024 based on an annualized calculation of the first nine months of the fiscal year.

Jefferies considers these revisions to transaction charges as routine adjustments and a smaller scale compared to similar changes in FY17 and FY23, suggesting that there is no strong inclination towards competitive pricing battles in the market.

The brokerage remains optimistic about the resilience of BSE's product pricing strategies and the expansion of its monetization efforts, unaffected by NSE's recent move.

Earnings Growth Projection

Juxtaposed with these transaction charge adjustments, the global brokerage firm anticipates BSE to see an earnings increase exceeding 2.5 per cent from FY24 to FY26E, maintaining an overall bullish outlook on BSE's future performance.

BSE's performance has been notably impressive, with the stock value soaring by 378 per cent over the preceding year. The stock has hit a 52-week low of Rs 406.2 and a high of Rs 2,599.

Reiterating investor confidence, BSE received a 'buy' rating from seven analysts, with a consensus target price of Rs 2815, according to Trendlyne data. The stock is also trading at a favorable position when compared to industry peers, boasting a price to earnings ratio below the industry average.

HDFC Securities joined in the optimistic sentiment with a 'buy' rating of its own for BSE on February 6, putting forth a target price of Rs 3,050.

BSE, NSE, Jefferies