GuruFocus - Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BSE Ltd (NSE:BSE) achieved its highest ever quarterly revenues of INR 819 crores, marking a 123% increase compared to the same quarter last year.
- The company surpassed the 50% operating EBITDA margin threshold for the first time, reaching 52% for the current quarter.
- BSE Ltd's mutual fund distribution platform, BSE Star MF, delivered record revenues, growing 100% year-on-year to reach INR 58.7 crores.
- The company recorded a significant milestone with a net profit attributable to shareholders of INR 346.8 crores, up from INR 120.5 crores, a growth of 188%.
- BSE Ltd is continuously investing in technology upgrades and is building a state-of-the-art data center expected to be operational by the end of the financial year.
- There is a concern about the sustainability of the core revenue growth, especially with upcoming regulatory changes impacting the derivatives market.
- BSE Ltd faces challenges in gaining traction for its single stock futures and options, with limited availability on major brokerage platforms.
- The company is experiencing higher clearing charges compared to other exchanges, which could impact its competitive positioning.
- There is a noted decline in volumes for BSE's Sensex and Bankex contracts, with a higher slowdown compared to NSE's similar products.
- Technological readiness and broker participation remain hurdles for expanding the reach of BSE's new products, impacting market penetration.
A: (CEO) The increase in contract size will result in higher premiums per contract, which should increase transaction charges. However, clearing charges, based on the number of contracts traded, will remain the same. We are in discussions with clearing corporations to reduce charges or unbundle them to pass on benefits to investors. No communication has been received about increasing charges from November 20th.
Q: What efforts are being made to ensure more traction in individual stocks and options, especially since they are not available with major brokers like Zerodha?
A: (CEO) We are working with brokers to provide technological access to stock futures and options. We are also engaging with participants to provide two-way quotes to enhance liquidity. Regulatory discussions have delayed intense efforts, but we are now focusing on increasing traction.
Q: Are there any plans to time expiries of new indexes to have more than one expiry per week, and have there been any setbacks from regulatory authorities?
A: (CEO) We are continuously interacting with market participants to understand their needs regarding expiries. Once we have clarity, we will seek regulatory approval to implement changes that benefit the market.
Q: Why are we seeing a higher slowdown in volumes for BSE contracts compared to NSE, especially for Sensex and Bankex contracts?
A: (CEO) The slowdown is partly due to fewer expiries in October and intervening holidays, which merged expiries. BSE has fewer contracts, increasing the impact of reduced attention compared to exchanges with multiple expiries.
Q: What is the impact of regulatory reforms on options market volumes, and is there a potential shift towards futures?
A: (CEO) Regulatory reforms aim to protect investor interests, likely reducing index options volumes. However, individual investors may not shift to futures due to perceived higher costs. The impact will be monitored, and further regulatory changes will be consultative.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.