Shares of Bombay Stock Exchange (BSE) Ltd. surged as much as 4.59% on Monday, hitting an intraday high of ₹3,379.30 before trading at ₹3,370.50 at 12:21 PM, following a significant upgrade from brokerage firm Motilal Oswal Financial Services. According to The Economic Times, the stock rallied as much as 4.3% to its day's high of ₹3,369 on Monday after Motilal Oswal upgraded the stock to Buy and assigned a target price of ₹4,000, implying an upside of 23%. This marks the first upgrade for BSE after nearly 18 months, with Motilal Oswal having downgraded the stock in June 2025. The brokerage has set a target price of ₹4,000, implying an upside potential of over 23% from the brokerage's reference price. The stock has demonstrated strong performance in 2026, outperforming the market by soaring 28% compared to a 13% decline in the Nifty 50, and has bounced back 12% from its low of ₹3,000 touched on October 1, 2026.
According to Motilal Oswal, BSE's futures and options (F&O) trading volumes have shown a strong recovery after facing significant regulatory challenges. The exchange's notional average daily turnover (ADTO) for year-to-date financial year 2026-2027 (YTDFY27) stands at ₹213 trillion, with the brokerage expecting FY27 ADTO to reach ₹216 trillion, up 16% year-on-year. As per The Economic Times, BSE's notional F&O average daily traded turnover (ADTO) fell 35% in August 2026 compared with the April-July 2026 average, following recent regulatory changes including stricter lending norms for proprietary traders effective July 2026 and CAS implementation in August 2026. However, September 2026 saw a modest recovery with ADTO rising 6% month-on-month, and volumes picked up significantly in October amid volatile markets, with ADTO up 49% month-on-month as of October 20, 2026. The recovery has gained momentum, with October 2026 seeing BSE's F&O ADTO surge 85% compared with levels recorded after the CAS-related reset in August 2026. The recovery has been supported by the partial CAS reversal effective December 7, 2026, which provides a regulatory catalyst beyond current volatility-led spikes.
According to the latest Motilal Oswal note, the brokerage has raised its revenue estimates for FY27 and FY28 by 8-10% and net profit estimates by 10-12% for FY27 and FY28, factoring in the strong volume run-rate, the anticipated benefits of the partial CAS reversal and the potential boost to cash-market volumes from NSE's listing. BSE's profit margins have improved sharply over the past few years, with its EBITDA margin expanding to more than 65% in FY26 from 9% in FY21, driven by a 57% revenue CAGR over FY21-26. The brokerage expects the margin to reach 70% levels as revenue grows and the business benefits from lower costs relative to its income. Motilal Oswal forecasts BSE's revenue to grow at a CAGR of 23% between FY26 and FY28, with profit after tax (PAT) growing at a faster CAGR of 27% over the same period. The Star MF platform continues to show strong growth, with quarterly transactions increasing from 12 million in Q1 FY20 to 245 million in Q2 FY27, now generating more than ₹800 crore in quarterly revenue. A sustained volume recovery combined with an improving premium-to-notional ratio could drive a further 20% increase in FY28E PAT, with every incremental rupee of revenue having the potential to deliver healthy profit growth.
According to Motilal Oswal, BSE has significant pricing advantages that could drive substantial revenue growth. The order rates that BSE charges for co-location servers are lower than those charged by NSE, providing scope for BSE to scale up this revenue stream. Similarly, transaction charges in BSE's derivatives segment are lower than those charged by NSE, with the brokerage estimating that closing this pricing gap could increase derivatives revenue by 8-10%. Both pricing levers, when implemented, would directly improve profitability. The exchange's cash market share has risen from a plateau of around 7% to 9% over the past two months, with cash average daily traded turnover (ADTO) reaching a new quarterly high of ₹105 billion in Q2FY27. The growth was supported by the introduction of a single contract note, implementation of smart order routing and the exclusive listing of popular stocks such as NSE and NSDL. The number of cash market members increased to 829 in September 2026 from 806 a year earlier, while the number of unique client codes (UCCs) traded hit a record 6.16 million during the month, reflecting rising participation on the platform.
BSE reported strong financial performance in Q1FY27, with revenue from operations advancing 63% to ₹1,566 crore from ₹958 crore a year back. Investment income also rose sharply to ₹135 crore from ₹79 crore, while other income stood at ₹5 crore against ₹7 crore in the year-ago period. However, total expenses increased 49% to ₹537 crore from ₹359 crore in the same period a year ago. Employee benefit expenses increased to ₹87 crore from ₹70 crore, technology expense rose to ₹61 crore from ₹50 crore, and clearing and settlement expenses increased to ₹90 crore from ₹55 crore. Regulatory contribution rose to ₹193 crore from ₹116 crore, with other expenses standing at ₹63 crore compared with ₹41 crore a year earlier. Depreciation expense increased to ₹43 crore from ₹27 crore. The firm's total expenses increased 49% to ₹537 crore from ₹359 crore in the same period a year ago. About 45% of expenses are fixed in nature, while 55% are activity-dependent, including clearing house expenses, which vary with the number of derivative contracts, and regulatory costs, which are linked to derivatives' notional turnover.
