BSE Ltd. reported a strong quarter, with revenue and PAT coming better than our estimate. The revenue growth of 9.5% QoQ was led by 35% QoQ increase in options revenue, but was offset by a drop in cash volume (-33% QoQ) and book building revenue (IPO related). BSE saw an impressive gain in its options premium market share, which increased by ~630bps to reach 18.8% in Q4, following the regulatory changes introduced in January 2025

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HDFC Securities Institutional Equities

BSE – Options driving growth; market share gain continues

BSE Ltd. reported a strong quarter, with revenue and PAT coming better than our estimate. The revenue growth of 9.5% QoQ was led by 35% QoQ increase in options revenue, but was offset by a drop in cash volume (-33% QoQ) and book building revenue (IPO related). BSE saw an impressive gain in its options premium market share, which increased by ~630bps to reach 18.8% in Q4, following the regulatory changes introduced in January 2025.

The April 2025 options ADTV further increased by ~25% month-on-month to Rs 155 billion, achieving a market share of 21%. We have taken a conservative volume of Rs 135/152 billion for FY25/27E, resulting in a market share of ~20%. The core Ebitda margin expanded by 87bps QoQ, but the expansion was lower vs expectation due to one-off in clearing and settlement cost. The SGF reversal boosted PAT for the quarter, and we expect SGF to be at ~5% of transaction revenue.

We expect the core margins to expand gradually with the shift towards better quality volumes and expansion in P/N ratio. We increase our estimates by 5/6% for FY26/27E EPS and core multiple to 40x vs 38x earlier, led by market share gains.

The revenue/EPS CAGRs of ~20/27% over FY25-27E are robust. We maintain our Add rating with a revised target price of Rs 6,200, which is based on 40x core FY27E PAT + CDSL stake + net cash ex SGF. The stock is trading at a P/E of 46/39x FY26/27E EPS

Kajaria Ceramics – Nineteen-quarter low Ebitda margin

We maintain Reduce on Kajaria Ceramics Ltd. with a lower target price of Rs 800/share (30x its Mar’27E consolidated EPS). We anticipate that the dumping of Morbi tiles in the domestic market will cause the organized sector to lose market share. Furthermore, volatility in tile exports will indirectly affect both the company’s volume and margin.

Revenue saw a slight 1% YoY increase in Q4, due to weak volume growth (+2% YoY) and a decline in tile realization (- 2% YoY). Operating margin reached a 19-quarter low of 11.3%, a decrease of 300 bps YoY and 200 bps QoQ. The company will discontinue its plywood operations.

Management noted muted domestic demand but anticipates outperforming industry growth. Currently, the company has no expansion plans.

We believe that if the company continues to report sub-par volume growth and margin, there is scope for further de-rating of its multiple

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