Event Participants
Executives
10 Anand Sethuraman, Deepak Goel, Geetha Gangadharan, Rudresh Kunde, Sanjay Jain, Shailesh Jain, S. Gopalan, Sundararaman Ramamurthy, Sunil Ramrakhiani, Viral Davda
Analysts
7 Aditya Vikram, Amit Chandra, Devesh Agarwal, Madhukar, Prayesh Jain, Supratim Datta, Swarnabh Mukherjee
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Investor Accounts | 25.8 crores | Added 3.5 crore new accounts in the past year; 11 states each now have over 1 crore investors, reflecting expanding retail participation |
| Consolidated Revenue | ₹1,707 crores | Best quarterly result on record; 14th consecutive quarter of record revenues, surpassing prior quarter's ₹1,630 crores |
| Operational Revenue | ₹1,566 crores | +63% YoY from ₹958 crores, driven by strong growth across trading and settlement activities |
| Transaction Charges | ₹1,328 crores | +80% YoY from ₹737 crores, reflecting robust growth in core trading and clearinghouse segments |
| Other Operating Income | ₹98 crores | +40% YoY from ₹70 crores, aided by data dissemination fees, colocation, and index services |
| Operating Expenses | ₹520 crores | +56% YoY from ₹332 crores; 54% attributable to regulatory fees and clearing/settlement expenses correlated with volumes |
| Operating EBITDA | ₹1,046 crores | +67% YoY from ₹625 crores, with margins expanding to 67% from 65% |
| Net Profit | ₹873 crores | +62% YoY from ₹539 crores, with net profit margin of 51% |
| Equity Cash ADT | ₹9,955 crores | Highest ever quarterly average daily turnover, reflecting sustained market participation |
| Derivatives ADPT | ₹29,615 crores | All-time high average daily premium turnover, +96% YoY growth |
| Colocation Revenue | ₹51 crores | Continued steady performance; 500 racks now in place with offtake to sustain ~1.5 years |
| StAR MF Transactions | 23.4 crores | +28% YoY, with revenue of ₹73.3 crores (+20% YoY) |
Geographic & Segment Commentary
Cash Market: Record quarterly ADT of ₹9,955 crores driven by efforts toward a level playing field including common contract note and best price execution. Management aspirational target of "meaningfully double-digit" market share by calendar year 2027, with institutional volumes and market share currently improving.
Derivatives: Record ADPT of ₹29,615 crores (+96% YoY). Launched derivatives on the BSE Focused IT Index (first in India for the wider IT sector), which has completed 3 expiry cycles with growing traction. Monthly volume (non-current/next week) contracts grew 5x since Jan 2025, with premium up 10x; over 610 members and ~650 FPIs participate, targeting 800 FPIs.
Primary Markets: Mainboard IPO activity moderated in H1 FY27 due to macro factors, but July 2026 saw recovery with 13 mainboard IPOs raising ₹18,348 crores. SME segment surpassed 750 listed companies in July (vs 600 a year earlier). IPO pipeline strong with 250+ companies targeting ~₹1.75 lakh crores. Total fundraising across platforms exceeded ₹6.2 lakh crores in Q1 FY27.
Mutual Fund & Other Platforms: StAR MF processed 23.4 crore transactions (+28% YoY), generating revenue of ₹73.3 crores (+20% YoY). StAR NPS platform continues to expand by integrating Central Record Keeping Agencies and pension fund managers.
Company-Specific & Strategic Commentary
Product Innovation: Launched derivatives on BSE Focused IT Index, making BSE the first Indian exchange to offer derivatives benchmarked to the wider IT sector. Advanced approval for 2 more indices, and is exploring an index with broader representation for institutional investors. Other pipeline areas include corporate bonds, electronic gold receipts, data dissemination, and 16 new indices created.
Data Business Transition: BSE will conclude its 13-year marketing partnership with Deutsche Boerse effective Jan 1, 2027, and will directly manage global distribution and licensing of market data. This move is expected to standardize outreach and establish direct client engagement.
Colocation Expansion: Data center business now has 500 racks with order flow charges at 20% of market rates. Management considering increasing rates at an appropriate time as market interest grows; current capacity expected to sustain for at least 1.5 years.
Subsidiary Rebranding: ICCL has been rebranded as BSE Clearing Limited, reinforcing alignment with the BSE brand and strengthening its position in India's financial market infrastructure ecosystem.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Cash Market Share | Meaningfully double-digit by beginning of CY2027 | Aspirational target; contingent on breaking "artificial barriers" and regulatory clarity on level playing field |
| FPI Participation | Target of 800 FPIs | Currently ~650 FPIs participating; working on deepening and broadening market participation |
| Regulatory Impact | Cannot draw solace from minimal visible impact | RBI circular may not be fully effective as remnant bank guarantees exist; full impact to be assessed in coming months as guarantees mature |
| Derivatives Volumes | Continue to gain momentum | New products like Focused IT Index gaining traction each expiry cycle; other products under consideration |
| Data Business | Direct distribution from Jan 1, 2027 | Move to standardize outreach and direct engagement with international clients |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory Headwinds | RBI circular effective July 1, 2026, and STT hikes present material headwinds. While impact on BSE options has been minimal so far, management cautions that full impact may not yet be visible as remnant bank guarantees mature; success depends on diversifying into other products |
| Cash Market Competition | Market share gains constrained by "artificial barriers" including best price execution gaps. While common contract note achieved, structural hurdles remain |
| Stock Options Liquidity | Challenging to bring liquidity across 200+ underlying stocks where product differentiation is limited; recognizing as aspirational goal with significant distance to cover |
| Global Macro Uncertainty | Foreign outflows of ₹3.6 lakh crores in first 7 months of 2026 were countered by domestic inflows of ₹5 lakh crores; geopolitical volatility combined with regulatory changes creates difficulty in isolating impact factors |
Q&A Highlights
Other Expenses Driver
- Question: What led to the decrease in other expenses by ₹40 crores quarter-on-quarter? (Aditya Vikram, DB Securities)
- Answer: A provision of about ₹40 crores was made in the previous quarter relating to a dues receivable from a creditor at a subsidiary, which inflated prior quarter other expenses. CFO declined to comment on future steady state. (Deepak Goel)
Colocation Business
- Question: What is the situation with colocation revenue improvement, rack count, and monetization plans? (Swarnabh Mukherjee, 360 ONE Capital)
- Answer: BSE has reached 500 racks in phases with gradual uptake. Charges have been increased to market rates, and now additionally charging for order flow, currently at 20% of market rates. Rack offtake to sustain ~1.5 years; management will consider rate increases at appropriate time. Breakdown of rental vs order flow income unavailable on call. (Sundararaman Ramamurthy, Deepak Goel)
Monthly Volumes & FPI Share
- Question: What is the progress on monthly volumes share, FPI participation, and impact of the RBI circular on volumes? (Amit Chandra, HDFC Securities)
- Answer: Non-current/near-week contracts grew 5x in contracts and 10x in premium since Jan 2025, taking time due to headwinds including RBI circular. Company doesn't measure success by market share; instead focuses on deepening and broadening markets. Currently ~650 FPIs participating, target is 800. Too early to assess RBI circular's impact at just 2 days. (Sundararaman Ramamurthy)
New Product Pipeline
- Question: What is the pipeline for new products beyond derivatives? (Supratim Datta, Jefferies)
- Answer: Focus areas include corporate bonds (with SEBI's "Ek Sashakt Bandhan" initiative), data dissemination, 16 new indices, StAR NPS platform for pension penetration, electronic gold receipts, and potentially a broader representative index. Two more indices approved for derivatives; Focused IT Index currently a priority. (Sundararaman Ramamurthy)
Cash Market Trajectory & Stock Options
- Question: How do you see cash market share trajectory and stock options development? (Prayesh Jain, Motilal Oswal)
- Answer: Cash market share is improving with common contract note achieved; best price execution still has distance. Aspiration to reach "meaningfully double-digit" market share by beginning of CY2027. Stock options remain challenging—single product with 200+ stocks, no product differentiation, needs more time before achievements can be claimed. (Sundararaman Ramamurthy)
Regulatory & STT Impact
- Question: What is the impact of RBI circular and STT hike on volumes, and any segment shifts? (Devesh Agarwal, IIFL Capital)
- Answer: Multiple simultaneous headwinds (global geopolitics, STT, RBI circular) make isolation difficult. Overall market was significantly impacted in futures and somewhat in options. BSE's futures impact minimal (not heavily traded). Options impact appears minimal but RBI circular may not be fully effective yet with remnant bank guarantees; full impact to be seen in coming months as guarantees mature. (Sundararaman Ramamurthy)
Technology Expenses, Depreciation, and Other Income
- Question: Why did technology expenses pick up sharply, depreciation decline, and other income increase? (Madhukar, JP Morgan)
- Answer: Technology expenses increased due to scaling from 10 crore to 1,800 crore order processing per day, modernizing 80+ peripheral systems, revamping clearing system, and segregating clearing and trading. Depreciation lower due to WDV accounting method reset at beginning of year. Investment income increased due to mark-to-market reversal after Q4 FY26 bond yield-related losses. (Sundararaman Ramamurthy, Deepak Goel)
Key Takeaway
BSE delivered its best quarterly results on record with consolidated revenue of ₹1,707 crores (14th consecutive record quarter), operational revenue up 63% YoY to ₹1,566 crores, and net profit of ₹873 crores (+62% YoY) at a 51% margin. Growth was driven by record derivatives ADPT of ₹29,615 crores (+96% YoY) and record cash market ADT of ₹9,955 crores, supported by 25.8 crore investor accounts and expansion into new products including Focused IT Index derivatives, corporate bonds, and StAR NPS. Management is transitioning data distribution in-house from Jan 2027, expanding colocation infrastructure, and pursuing meaningful double-digit cash market share by calendar year 2027. Key watch items include the full impact of the RBI circular as bank guarantees mature, the trajectory of FPI participation toward the 800 target, and the success of new product launches in offsetting regulatory headwinds.