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BSE Ltd.
16th January 2017

Reco: Subscribe

Offer for Sale of upto 1.54 Crs Equity Shares of FV Rs. 2/- each (Rs. 1,243 Crs)
(Price band of Rs. 805-806 per share)
Issue Opens: 23 rd Jan 2017
I.

Issue Closes: 25 th Jan 2017

BSE- Indias favourite Stock Exchange

BSE, established in 1875, is the oldest Stock Exchange in Asia with a glorious history of over 140 years. It is the
fastest Stock Exchange in the world clocking a median trade speed of 6 micro seconds.
BSE is one of the most recognizable brand names in India. This global brand helps in attracting companies to list on
the exchange, attracting retail and wholesale participants to the various market offerings. This makes BSE the worlds
largest exchange by number of listed companies (5,329) and Indias largest and worlds 10th largest exchange by
way of market capitalization , with US$ 1.7 trillion in total market capitalization of all listed companies.
According to CARE Research, BSE ranks third globally in terms of currency options and futures contracts traded in
2015, with 430 million currency derivative contracts traded. During the period FY14 to FY16, the total number of
currency contracts traded on the BSE increased from 87 million to 420 million.
BSE has robust financials as can be seen from its H1FY17 performance- Total income of Rs.386 Crs, EBITDA of
Rs.198 Crs (Margin -51%), PAT of Rs.129 Crs (Margin-33%), huge reserves and surplus of Rs.2,565 Crs on a tiny
equity capital of Rs.10.7 Crs with a book value of Rs.470 per share (FV-Rs.2).
BSE has sought to diversify its revenue stream to support its fiscal policy. Revenue is derived from a variety of sources
including revenue from trading activities on the exchange, revenue from post-trade services, initial and recurring
listing fees from equity, debt and derivative products, and subscription fees from data products.
BSE intends to strengthen its position to become the exchange of choice in India and also expand its cross border
reach by entering into strategic alliances. For example, to expand the reach in India itself, BSE has partnered with
S&P Dow Jones Indices LLC, USA to grow the index business by calculating, disseminating and licensing various
index products.
Deutsche Boerse AG has acquired a little under 5% stake in BSE, where it will collaborate with BSE for product
development and innovation, which includes extending its existing infrastructure and creating new market data
solutions and infrastructure to support BSEs product offerings.

II.

BSE Financial Performance at a glance

Particulars (INR Crs)
Total Income
EBITDA
PAT
EPS*

H1FY17

H1FY16

FY17E

FY15-16

FY14-15

FY13-14

FY12-13

386
198
129
11.1

311
138
81
7.5

830
415
260
48.5

670
312
177
15.9

584
291
156
14.0

485
243
135
12.7

553
301
108
10.3

10.7

10.7
2,512

10.7
2,561

10.4
2,366

10.4
2,279

Equity Cap*
Reserves
* Equity share capital consists of 5.37 Cr shares of Face value Rs.2 each now.

BSE has robust financials as can be seen from its H1FY17 performance- Total income of Rs.386 Crs, EBITDA of
Rs.198 Crs (Margin -51%), PAT of Rs.129 Crs (Margin-33%), huge reserves and surplus of Rs.2,565 Crs on a tiny
equity capital of Rs.10.7 Crs with a book value of Rs.470 per share (FV-Rs.2).
BSE generously rewarded its shareholders with a dividend of 750% in FY15-16.

III.

BSE- Valuation
BSE IPO is being launched at a price band of Rs.805-806 per share. In H1FY17, BSE has already posted PAT of
Rs.129 Crs ( full year FY17 estimate being Rs.260 Crs on a tiny equity capital of Rs.10.74 Crs, generating a robust
EPS of Rs.48.5). At the higher price band of Rs.806 per share, it works out to a modest PE of 16.6x its FY17E EPS,
making it a very attractive IPO for investors. We recommend all investors to SUBSCRIBE to the issue.
(Click here for a detailed insight into BSE Ltd prepared by NVS Wealth Managers Pvt Ltd.)

IV.

V.

BSE- Diversified and Integrated Business verticals

BSE Establishment of International Exchange at GIFT City

BSE, on 9th January, 2017, launched Indias first international exchange India INX at International Financial
services centre (IFSC), Gujarat International Financial Tec-city in Gandhinagar, Gujarat and was inaugurated by our
honourable Prime Minister Narendra Modi. This project is hailed as PM Shri Narendra Modis darling project and has
received full support from him.

VI.

BSE Peer Comparison

Particulars (INR Crs)- FY16
Total Income incl.
EBITDA
PAT

BSE

MCX
670
312
177

333
175
42

Face Value
Eq. Cap
Reserves
Networth
CMP
MCAP
Dividend

2**
10.7
2,515
2,526
806*
4,328
750%

10
51.0
1,156
1,207
1,203
6,134
65%

EPS
Book Value

33**
470

8.3
237

P/BV
PE

1.7
24.5

5.1
144.4

*Rs. 806 is the upper band of IPO Price

**Now Equity share capital consists of 5.37 Cr equity shares of FV-Rs.2 each

MCX with a topline of only Rs. 333 Crs is trading at PE of 144x its FY16 EPS, whereas BSE with the topline of Rs. 670
Crs is available at a PE of only 25x its FY16 EPS and 16.6x its FY17E EPS. The P/BV of BSE is 1.7x as compared to
5.1x of MCX. This shows that BSE is available at a huge discount to its immediate peer and there is a huge upside
potential.
Investors must note that BSE will also be launching the commodity exchange as one of its verticals in its bouquet of
various streams and that could again substantially add value to the market capitalization of BSE in the times to
come.

VII.

BSE- Other developments

Set up of India's first bullion exchange- India Bullion and Jewellers Association (IBJA) has signed an agreement with the
BSE for setting up a bullion exchange, the first of its kind in India. Both entities have approached the Union ministry of
finance for approval. The exchange will primarily trade in gold. Once this stabilises, trading in silver will be launched. It would
primarily offer three settlements a day for both buyers and sellers.
Set Up of Commodities Exchange as part of BSE- BSE has plans to set up commodity exchange in India. That will allow
trading in metals, oil and gas.SEBI has already given permission and BSE has now applied for the license from Forward
Marckes Commission(FMC).

VIII.

BSE- Valuation & Recommendation

BSE, the first multi - platform stock exchange to be listed in the country is to be listed at Rs. 805-806/share (FV Rs.
2), valuing the stock exchange at a little over Rs. 4,300 Crs, leaving huge scope for value investors.
The robust financials of BSE with huge reserves of Rs. 2,565 Crs and a cash & bank balance of Rs. 1,421 Crs as
against tiny share capital of only Rs. 10.7 Crs (FV Rs. 2) and a huge dividend payout is a pointer to the fact that
shareholders can be rewarded in future with larger dividend and liberal bonus issues from time to time.
BSE has large embedded value from its direct and indirect subsidiaries - CDSL, ICCL, BIL, MTPL etc., especially
most of them being profit making and earning good margins. BSE Training Institute (BIL) is a strong brand name for
finance related courses and has tie ups with Top Educational Institutes. As and when these all subsidiaries grow larger
and maybe even get listed, then BSE can unlock huge value for its stakeholders.
BSE IPO is being launched at a price band of Rs.805-806 per share. In H1FY17, BSE has already posted PAT of Rs.129
Crs (full year FY17 estimate being Rs.260 Crs on a tiny equity capital of Rs.10.74 Crs, generating a robust EPS of
Rs.48.5). At the higher price band of Rs.806 per share, it works out to a modest PE of 16.6x its FY17E EPS, making it a
very attractive IPO for investors. We recommend all investors to AGGRESIVELY SUBSCRIBE to the issue.
We believe that BSE IPO could be one of the best wealth generators of 2017.
CONTACT US IMMEDIATELY FOR YOUR APPLICATION FORMS AND HNI INVESTORS CAN GET IN
TOUCH WITH US TO DESIGN A PROFITABLE INVESTMENT STRATEGY

IPO Subscription Details:

Minimum Order Quantity
Resident Retail Individual Investors
Non-Retail / Non-Institutional Investor

18 Equity Shares and in multiples of 18 shares thereafter

Payment through ASBA only
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Corporate Office Address: 702, Embassy Centre, Nariman Point, Mumbai 400 021 Tel.:+91 22 61539100/21,
Fax: +91 22 61539134 Email: info@nvswealthmanagers.com Website: www.nvswealthmanagers.com

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Caution: Risk of loss in trading can be substantial. You should carefully consider whether trading is appropriate for you in light of your experience,
objectives, financial resources and other relevant circumstances.
Method: We have not given a target price for the stock
Rating Scale : This is a guide to the rating system used by our Research team. Our rating system comprises six rating categories, with a corresponding risk
rating.
Risk Rating
Risk Description

Predictability of earnings/ Dividends; Price volatility

Low risk

High predictability / low volatility

Medium risk

Moderate predictability / volatility

High risk

Low predictability / High volatility

Total expected return matrix

Rating

Low Risk

Medium Risk

High Risk

Buy

Over 15%

Over 20%

Over 25%

Accumulate

10% - 15%

15% - 20%

20% - 25%

0% - 10%

0% - 15%

0% - 20%

Hold
Sell

Negative returns

Negative returns

Negative returns

Neutral

NA

NA

NA

Not Rated

NA

NA

NA

Please Note: Our recommendations are for a minimum period for one year.
Corporate Office Address: 702, Embassy Centre, Nariman Point, Mumbai 400 021 Tel.:+91 22 6631 5511/12,
Fax: +91 22 61539134 Email: info@nvswealthmanagers.com Website: www.nvswealthmanagers.com