Thread by @alphaspotcap

BSE Analysis!

A detailed thread below🧵👇🏻
#investing #StocksToWatch

(1/21)

About -

BSE is Asia's first & the Fastest Stock Exchange in world with the speed of 6 micro seconds.

In 2017 BSE become the 1st listed stock exchange of India.

It launched India INX, India's 1st international exchange, at GIFT CITY IFSC in Ahmedabad.

(2/21)

• It provides an efficient & transparent market for trading in equity, debt instruments, equity
derivatives, currency derivatives, commodity derivatives, interest rate derivatives, MF, stock lending & borrowing.

It is debt free & dividend payout ratio is pretty strong.

(3/21)

Sectoral Overview-

1) As of FY21 there were 3 Stock Exchanges in the Equity Cash, Equity derivatives and Currency Derivatives Segment. 5 in the Commodities Derivatives
Segment, 5 clearing corporations, 2 depositories, & 9,975 Foreign Portfolio Investors (FPIs).

(4/21)

2) Its role in the economy is vital to ensure India remains among the top destinations for domestic & global businesses to invest.

• It supports various intermediaries like brokers, sub brokers, corporates, banks,
depositories, depository participants, & investors.

(5/21)

Management’s view

1) Management expects that in next 2-3 years the revenues from transaction charges & listing are going to be fairly larger. By 2024, the transaction charges
from stocks may start getting eclipsed by the charges coming out of the mutual fund business

(6/21)

2) Power exchange is going to be a very exciting market and therefore provides an opportunity for them to grow exponentially in that business going forward.

Power Ministry aims at increasing share of exchange trading in total power supply volume to 25% by FY24 vs 5% now

(7/21)

• BSE’s India INX (India International Exchange)

It is the only dominant player in India’s IFSC( International Financial Services Centre) with a market share of over 85% in derivatives trading & ~92% in bond listing.

(8/21)

• BSE’s India INX’ daily trading turnover on average massively rose from $2.5Bn to $11.8Bn in H1FY22.

This increase in trading activity reflects growing interest in IFSC among the broking fraternity at large.

(9/21)

• Advantages of BSE India INX:

1) Better Technology
2) Better Services
3) Zero Cost

It doesn’t charge for the services as the market is very price competitive, though it gets listing revenues.

Instead, it is currently focusing on solidifying it’s market share.

(10/21)

• BSE’ Star Mutual Fund:

It is the largest regulated exchange-based online MF distribution platform.

1. ~1.52 crore transactions in Sept, worth ₹35,242 crore

2. ~7.8 crore transactions in H1FY22 (83% of the total in FY21)

3. Its turnover rose 45% on YoY basis.

(11/21)

4. It commands a market share of 81.8% in the segment.

5. The management is open
to monetization of the Star MF platform via sale to a strategic investor.

6. BSE Star MF continues to have new peaks of transactions every month & is seeing consistent equity inflow.

(12/21)

• Understanding Interoperability

It refers to a mechanism wherein trades executed on any exchange can be settled or cleared through any of the clearing corporations and not necessarily restricted to the clearing corporation of the exchange on which the trade was done.

(13/21)

• BSE & Interoperability:

Inter-operability will increase liquidity on BSE’s electronic trading platform over time.

While some brokers have complied with interoperability, some have not complied. Appropriate regulatory penalties are being charges to such members.

(14/21)

• Key growth drivers for BSE in each segment-

Equity - Cash & Derivatives:

1. Interoperability

2. BSE investment in liquidity enhancement schemes on
derivatives. Although not a long term play, this has given
sufficient momentum in the last few quarters.

(15/21)

• Star MF-

1. BSE is around 15% of all MF
transactions, and is able to negate competition & still grow the revenue.

2. MF industry itself is poised to grow because of the financialization of savings push.

3. BSE managed to start charging revenues for their services.

(16/21)

• BSE’s future value creators-

1. Commodity Derivatives: BSE has been growing aggressively on its commodity derivatives business. Like a startup, BSE is eyeing higher growth in topline and market share.

2. More push of India INX

(17/21)

3. Gold Spot Exchange- In Dec ‘20, GOI notified bullion exchange regulations paving the way for
setting up entire eco system for bullion trading.

BSE India INX is a part of discussions with GOI to set up an International bullion exchange in the GIFT city

(18/21)

Sectoral future outlook-

Major factors impacting Indian capital markets in the coming year include-

1. Growth led by policy reforms

2. Move towards digitization

3. Monetary stance of central banks of major economies

4. Economic & trade policies.

(19/21)

BSEs Q3 numbers:

1. Cash volumes declined 7% QoQ

2. Cash/derivative market share
for Q3FY22 stood at 7.3/3.3%, -74/-82bps QoQ.

3. Strong growth was witnessed in the exclusive cash segment (+28% QoQ) and StAR MF
(+18% QoQ)

4. INX declined sharply by -67% QoQ.

(20/21)

BSE enjoys strong brand visibility. New initiatives like the insurance platform, power & spot exchange are promising. INX, the market leader has huge growth potential. High Dividend Payouts, Investment in CDSL, Strong BS & Debt Free Status makes it extremely attractive.

(21/21)

What do you think about BSE and how do you see it performing against NSE, which is planning to launch IPO soon?

@caniravkaria @kuttrapali26 @ValueEducator @Jitendra_stock @iamrakeshbansal @safiranand

Comment down below!

Happy Reading! 🙂