Posted on March 3, 2025, by Niftynews
BSE shares experienced a notable decline of 5% on March 3, 2025, following a revised price target by Goldman Sachs. The decline reflects growing concerns about the future performance of BSE shares amidst changes in the regulatory environment and market conditions. The stock is now 30% lower than its peak of ₹6,133, signaling that investors are cautious about its near-term prospects.
Goldman Sachs Revises Price Target for BSE Shares
Goldman Sachs lowered its price target for BSE shares from ₹5,650 to ₹4,880, signaling a more conservative outlook. While the brokerage maintained a “neutral” rating, this adjustment in the price target reflects the potential risks to the exchange’s profitability due to softer market conditions and regulatory changes. Although the target suggests an 11% upside, the revision highlights uncertainty in the stock’s near-term trajectory.
Impact of SEBI’s Proposed Regulations on BSE Shares
A major factor contributing to the decline in BSE shares is the SEBI consultation paper issued on February 24, 2025. The paper proposes measures aimed at reducing volatility in the derivatives market, a segment that makes up about 50% of BSE’s revenue. These proposed regulations have raised concerns that any changes in the derivatives market could lead to reduced trading activity and lower revenues for BSE.
Goldman Sachs highlighted that this uncertainty regarding SEBI’s proposed changes has been a significant factor in the downward pressure on BSE shares. With options trading being a key revenue generator, any alterations in the market structure could harm BSE’s earnings in the coming quarters.
Softer Market Volumes Affect BSE Shares
Beyond the regulatory concerns, BSE shares have also been impacted by weaker-than-expected market volumes. Goldman Sachs pointed out that industry volumes in both cash and options markets were softer than anticipated during February 2025. The Average Daily Turnover (ADT) in the cash market was also below expectations, reflecting reduced trading activity on the exchange. This decline in market volume is expected to weigh on BSE’s earnings, contributing to the brokerage’s lowered forecasts for the exchange.
Revised Earnings Projections for BSE Shares
As a result of the reduced trading volumes and potential regulatory impact, Goldman Sachs has revised its Earnings Per Share (EPS) estimates for BSE. For the years 2025 to 2028, the EPS projections have been cut by 1%, 14%, 12%, and 11%, respectively. This revision reflects the expectation of slower growth in market activity, which is expected to affect BSE’s overall performance and its ability to meet previous earnings targets.
The Correction in BSE Shares: What It Means for Investors
The recent correction in BSE shares is largely attributed to the market’s reaction to the proposed regulatory changes and the lower trading volumes. While the final outcome of SEBI’s proposed rules remains uncertain, the market has adjusted by pricing in these potential risks. As a result, BSE have seen a decline in their value, reflecting the potential challenges the exchange faces in the coming months.
BSE Shares: Trading 28% Below Peak Value
The stock has now fallen approximately 28% from its peak value of ₹6,133, which occurred earlier. This decline has raised questions about the exchange’s future growth prospects, especially in light of regulatory changes and market volatility.
Goldman Sachs Maintains Neutral Rating on BSE Shares
Despite the negative revisions to its price target, Goldman Sachs maintains a neutral rating on BSE. This implies that while there are risks associated with the stock in the near term, BSE shares may still offer some recovery potential. With the revised price target indicating an 11% upside, investors will be closely watching developments in the regulatory space and the broader market conditions for signs of recovery.
