Duopoly stock crashes after Goldman Sachs cuts target price amid SEBI’s proposed risk changes

India’s capital markets are thriving, with over 18.5 crore demat accounts as of December 2024, despite 53,000 closures. The Nifty 50 index has shown resilience amidst global volatility, and the number of unique mutual fund investors has reached 5.6 crore, reflecting strong investor participation and growth in the sector

Price movement

With a market capitalization of Rs 59,213.62 crore, the shares of BSE Ltd were trading at Rs 4,374 per share, decreasing around 5 percent as compared to the previous closing price of Rs 4,633 apiece.

Brokerage Reccomdation

Goldman Sachs, one of the well-known brokerages globally, gave a ‘Buy’ call but slashed target price on this stock from Rs 5,650 apiece to Rs 4,880 apiece, indicating a potential upside of 11

percent from Monday’s price of Rs 4,374.00 per share.

Reccomdation Rational

SEBI, in a consultation paper on February 24, proposed a new risk measurement method for investors. It suggests shifting equity derivatives open interest (OI) computation from notional terms to a future-equivalent or delta-based approach, aiming for more accurate risk assessment in the market, as per brokerage insights.

The regulator’s measures aim to reduce manipulation and align derivatives risk with cash market liquidity. In the index-derivatives segment, improved risk management will curb large positions in index options with low open interest. Experts believe this will enhance market stability and transparency, reducing potential risks.

SEBI, BSE Challenge FIR Order

SEBI and BSE have approached the Bombay High Court against an ACB Court order directing an FIR against former SEBI Chairperson Madhabi Puri Buch and officials over alleged regulatory lapses in Cals Refineries’ 1994 listing. The High Court has granted an urgent hearing on March 4 and temporarily restrained FIR registration.  

The case stems from journalist Sapan Srivastava’s complaint, alleging SEBI failed to act against BSE and Cals Refineries, causing investor losses. SEBI and BSE oppose the order, citing lack of prior hearing and officials’ absence during the listing, and are taking legal steps to challenge it.

Financial condition

Looking forward to the company’s financial performance, revenue climbed by 53 percent from Rs 426 crore in Q3FY24 to Rs 832 crore in Q3FY25 but during the same time, net profit shrunk by 260 percent from Rs 106 crore to Rs 219 crore.

Also read: TVS Motor & 3 other auto stocks jumps after reporting strong sales growth of up to 28% in February

Market Dynamics

Increased market volatility persists amid global fragility and geopolitical tensions. The Indian Finance Minister’s budget offers substantial tax relief for the middle class, potentially driving consumption and savings. BSE plans to leverage rising disposable income to boost market participation, fostering a cautiously optimistic outlook.

Business Update

BSE saw 30 new listings in Q3, raising a record Rs 95,512 crore, up 261 percent YoY, with 108 active IPO applications. Average daily turnover in the cash market rose to Rs 6,800 crore, while the derivatives segment hit a record daily premium turnover of Rs 8,758 crore.

Strategic Focus

BSE is focused on enhancing customer experience and operational efficiency through continuous trading system upgrades to handle higher volumes. It is also actively onboarding more Foreign Portfolio Investors (FPIs) and improving premium quality to strengthen its market position and attract greater investor participation.

Future Outlook

The management recognizes challenges in the Bankex segment, with trading volumes down 95 percent, but is confident in rebuilding liquidity through strategic initiatives. Optimistic about 2025, they remain focused on executing their vision to lead India’s capital markets.

Company Profile

The Bombay Stock Exchange (BSE Ltd) is an Indian stock exchange headquartered on Dalal Street in Mumbai. The Company allows the trading of stock, currencies, debt instruments, derivatives, and mutual funds.

Written by Abhishek SIngh

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