BSE Limited (BSE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the BSE Limited Q1 FY '27 Investor Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Sethuraman, Head of Investor Relations. Thank you, and over to you, sir.

Thank you, Davin. Good evening everyone. Welcome to BSE's Q1 FY '27. My name is Anand Sethuraman and joining me today is BSE leadership team, including our MD and CEO, Mr. Sundararaman Ramamurthy; Mr. N. Gopalan, Executive Director, CFO, Deepak Goel . Chief Executive Officer; Mr. Suri Ramachand, Chief Business Officer; Dr. Vivek Jain, Chief of Staff Strategy; Mr. Vidul Dana, Chief Technology Officer; Mr. Vanish Kundert Policy and Strategy; Mr. Sanjay Jain, Chief Officer; Mr. Shailesh Jain, Head of Legitimate company equity. . And also joining us are members of our finance, Investor Relations and Corcos. We also have the MD and CEO of our subsidiary companies, BSI with Reshape and DSC Index Services, Mr. Ashutosh, prospectively. Our latest financial results and investor presentation are now available on the BSE website. We'll start with remarks from on our performance, followed by our Q&A session. All the participant lines will be muted for the edition of the call. There will be an opportunity for you to ask questions after the initial management in ours. Please note that some of our statements made today may be forward-looking in nature and are subject to risks and uncertainties. The company does not undertake to complete this forward-looking statements. With this, I would now like to invite BSE MD and CEO, to share his views. Thank you and over to you.

Thank you Anand. I am audible. Good evening, everyone, and thank you for joining us today. Let me begin by welcoming our shareholders an investors, members and all other stinkholders on this call. Let me first talk a little bit about the macro economy in the one. Indian capital markets continue to demonstrate exceptional resilience and we need global uncertainties. Following a deboary correction, near 72,000 the benchmark centric staged a robust recovery firmly anchored by strong domestic fundamentals and vibrant economic activity. This positive momentum is further validated by engaging corporate earnings, underscoring the markets profound debt and long-term growth prospects. Commercially, the defining shift in our ecosystem is the accelerating strength of leading and logistic institutional participation. While global dynamics led to of INR 3.6 crores during the first 7 months of 2026, divesting in situations convincingly counter this trend deploying an histories INR 5 lakh crores. With a powerful local support, combined with modeling foreign selling in July, highlights, unshakable confidence in India's trajectory as our markets become increasingly self-sustain. Against this backdrop I'm pleased to share that BSE had a strong start to the financial year with Q1 FY 2027, being the companies with best quarterly results on record and the whole team constituted quarter of record revenues. . Unformulated revenues stood to INR 1,707 crores surpassing the previous quarter's record of INR 1,630 crores. I will now share some of the key financial numbers on a consolidated basis, for the quarter ended June 30, 2026 as compared to the previous year. Operational revenues have grown by 63% to INR 1,566 crores from looking in INR 98 crores. Transaction charges comprising revenues from the equity cash, equity derivatives, mutual fund and gaming house segments have registered a substantial increase of 80% on to INR 1,328 crores from INR 737 crores, reflecting robust growth in core trading and sentiment related RCA. Other operating income is in close, enhanced data desalination sees or location, industrial services, et cetera, has increased by 4% to INR 98 crores from INR 70 crores. Operating expenses increased by 56% to INR 520 crores from INR 332 crores. It may be noted that 54% of the total operating expenses are attributable to regulatory fees and clearing and settlement expenses, all of which is directly correlated the increase in transaction volumes. The operating EBITDA including contribution to core SGFs has increased by 67% to INR 1,046 crores as compared to INR 625 crores with margins expanding to 67% from 65%. The net profit attributable to the shareholders of the company. has demonstrated a significant acceleration to reach to INR 873 crores from INR 539 crores representing a robust year-on-year growth of 62% with a net profit margin of 41%. The continued improvement in both the top line and important line demonstrates the company's robust operational performance effective execution and united financial momentum. It further highlights, broad-based participation across some of the platforms the impact of the strategic initiatives and the rising confidence of India's capital market ecosystem in a key indicator of the deepening market footprint is our investor registration data. . The total number of investor accounts registered on the VSG has reached INR 25.8 crores penetrating sustained expansion of retail participation across the country. Over the past year alone, we added INR 3.5 crore new investor accounts with 11 pace each contributing more than INR 1 crore investors. This clearly underscores the true demographic and geographic expansion of India's capital markets. Complementing this structural growth, we conducted 23 individual awareness programs during Q1 FY '27 reaching over 4,900 participants. Looking ahead, the VSE remains unbreakable committed to expand the industrial awareness in advancing financial literacy. We view this educational mandate for promoting in-home investment decisions regarding investor interest and securing the long-term sustainable growth on India's financial ecosystem. Let me now deliver a few key trends shaping our business this quarter. The first half of FY '27 witnessed a modernization in main or IPO move activity largely driven by global macroeconomic factors as mentioned earlier. However, we have already begun to see and aging in soft recovery. June 2026 marked a notable improvement in primary market activity, we purge main mode IT mods, collectively raising approximately INR 18,340 crores reflecting improving investor sentiment and renewed issuer confidence. While the main word IPO market businessed temporary moderation, the SME segment remains high rent and continue to attract strong issuer and investor interest. BSE SME achieved a significant mine store by surpassing 750 leadership companies in July 2026 compared 600 year earlier. The latest 15 listings alone have raised INR 6,323 crores accounting for nearly 38% of cumulative capital range on the platform, highlighting the increasing contribution of SME to India's economic growth and capital development. Overall, in Q1 FY 2027 issurance INR 6.2 crores through BNC's fundraising platforms across equity, debt, box, commercial vehicles, reach, engage and municipal launch reaffirming the trust placed in VNC's market infrastructure. Looking ahead, we remind constructive on the outlook for India's primary markets. The main board IP pipeline remains strong with over 250 companies seeking to access the capital markets and targeting funding of approximately INR 1.75 lakh crore. Moving on to other trading segment. We continue to witness strong momentum across both of the cash and derivatives market supported by growing client participation and product innovation. In the equity cash statement BSE recorded its highest ever quarterly average daily turnover of INR 9055 crores in Q1 27, reflecting sustained market participation and strengthening liquidity on the exchange. Our derivative segment daily word at record performance. With average daily premium turnover ranging an all-time high of INR 29,613 crores during the quarter, recognition a robust year-on-year growth of 96%. Crucially, our strategic focus on expanding market debt -- this delivery mentionable able as a service. During the quarter, the inceptionally launched dividends on the BSP focused IP mix which has already completed the expiring cycles with trading activity and market participation, continuing to gain momentum every passing expirery figure. By introducing these contracts -- we will see the game the first change in NP to offer delivers products benchmark to the vital IT sector who met an immense market demand for hedging and tactical risk management and technology portfolios. The early adoption of focused IT Index, combined with other growing derivatives volume proves that our platform enhancement and unique product designs are resonating deeply with market positions. Moving to other operational revenue streams BSE's business continue to perform well until 1 with revenues of INR 51 crores in Q1 and transition. We remain 1 to further expanding our colocation infrastructure in line with client demand and growing market pacification. Turning to our retail and distribution business, be continues to deliver strong and consistent growth. During June FY '27 the platform processed INR 2.4 crore transaction, representing a healthy 28% year-on-year increase. Revenues for the quarter grew 20% year-on-year to INR 73.3 crores, reflecting continued growth in industry participation and the increasing scale of India's mutual fund ecosystem. As mentioned in the last earnings call update start in platform by denesting technologies continues to expand by integrating record at agencies and pension fund managers that are by providing the unified architecture for seamless MPS adoption and management. Growth is initiative. We are strengthening our position as a comprehensive investment and retirement solutions by supporting investors through the long-term well creation journey to further unlock the latent value of our revenue trails. We are transitioning our data business operations. Starting Jan 1 '27, BSE will conclude partnership with Gulas and directly manage the distribution and licensing of our market data worldwide standardizing our outreach and establishing a direct line of engagement with our international client base. Our key subsidiaries, the Indian Clearing Corporation Limited, ICL and DLC Index Services continue to scale through new client acquisitions, product innovation and enhanced technology adoption. Furthermore, our clearing corporation formally known as ICCL has been rebranded as BSE clearing limited reinforcing its strong alignment with the trust B&C brand and strengthening its position within India's financial market interest ecosystem. Overall, Q1 '27 was another strong quarter of BSE marked by healthy growth across our businesses. continued product innovation and an expanding participation on some platforms. We remain focused on strengthening the market infrastructure enhancing the customer experience and creating new opportunities for insurers, investors and intermediaries. Furthermore, our structural transformation and consistent market execution allowed us significant institutional recognition. BSE was recently a these use well related of the year ago at the NBP profit business leadership towards 2026 patented by the honorable Union Finance minister. This operate alongside being means deliver is extreme of the year and provider reviewer, among others, underscores and other others underscores our industry leadership and validates our ongoing commitment to generating exceptional value for all of our stakeholders. Looking we remain confident to the long-term prospects of India's capital markets, backed by strong market position, technology-led innovation and diversified business model. We will continue to invest in future growth opportunities, expand our product and service offering and deliver sustainable value all stakeholders. Thank you for your continued trust and support. With these, I now hand over the call back to Anand.

Thank you, sir. We will now open the floor for question-and-answer session. I request all participants to kindly limit yourself to 1 question per participant. .

[Operator Instructions] The first question is from the line of Aditya Vikram with DB Securities Private Limited.

So sir, I was looking at the presentation, I just want to understand what led to a decrease in your operating expense by INR 400 crores in other expense side? .

Is it INR 400 crores and INR 40 crores.

I'm sorry, INR 40 crores.

So I think my CFO will answer it. There was a provision made with regard to our time to see from one of our creditors. There also provision made for it, that should be the case. Deepak can you explain.

So there was a potion of about INR 40 crores in subsidiary clearing 1 from Manotas because of that previous quarter, other expenses was slightly higher.

Okay. So this would be a steady state of other expenses going forward? Is that fair to assume?

I would not want to comment on that. But on a comparable basis, the reason why March spaces were higher.

The next question is from the line of Swarnabha Mukherjee with 360 One Capital.

Congratulations on a good set of numbers. My question pertains to the colocation business. I just wanted to understand -- so I mean, the quarter-on-quarter improvement in the revenue -- just wanted to understand what is the situation here? If you could give some color in terms of offtake and number of fracs that you have? And any plans of further monetization if you could highlight that will be very helpful.

Thank you, Mr. Murkerjee for your kind words. As you would know, the BSE we started this derivatives business in before. We did not have any meaningful number of ads or a property in assets while we started developing the data center business. in the cases, we wanted to increase the number of rats. I've always been telling that we will take it up to 500 numbers. And over a period of time, today, I'm very proud to say we have got that number in place and we have 500 racks. When we are giving these racks over a period of time in phases, what happens is the offtake of the number of racks is also gradual and upward movement. And the charges have been changed from the initial number to the number for rack quarters rent normal what is available in the market that has increased our rely orders are flowing because of which if you look at it, there has been a steady increase in the revenue. As far as what is the state at this point of time, we feel 500 that we have with the proper offtake that has already happened will sustain ourselves for at least a minimum of 1.5 years. So that is our current thought process the traffic we are seeing given the global conditions and local economic conditions. As far as the order flow is concerned, currently, whatever we are charging is 20% of what the market rates are. We would reconsider whether we should increase it or not at an appropriate time and appropriate stages. We have always considered as a place where it has to move up in terms of charging based on market interest increasing more and more with sensex and other products of BSE. So that is where we actually stand at this point of time.

Understood, sir. Very clear. Just is it possible to break up the INR 51 crores in rental and order flow-based income?

Swarna, we'll just take that question later. can possibly connect later. We don't have the numbers currently.

Our next question comes from the line of Amit Chandra with HDFC Securities

Sir, my first question is is related to the monthly volumes. So last quarter, we mentioned that we are focusing more on increasing the share of the monthly volumes in the auctions overall volumes, and we have also onboarded quite a number of SPIs onto our platform. And the share of SPI is also increasing gradually. But what is the kind of rate we are seeing there? And also in terms of the market share gap between the notion and the premium when we can see that converging? And also, if you can give your initial thoughts on the recent cash mechanism. Is it -- how is it going to impact the volumes?

Question actually in 4 questions of different topics. The part of it, I will first say that it is too early to talk in great detail. It is just 2 days. Let us keep it for a subsequent day. Let us look at the monthly volumes and talk about in detail and about the market share in. As far as the monthly volumes, which we've always been telling that we are working on, we are very happy to see is if I take January 2025 number of contracts traded in other than the week that is current week, not currently, not next week other than current week next week if we take. If I take it and the current volume in terms of number of contracts is actually 5x more showing an improvement from Jan '25 to July '26. It's a long period. It is taking time, but it is growing. In between this period, we have seen a lot of changes, as you would recollect, a lot of headwinds, notwithstanding that it has grown. And in terms of premium, if I look at the same period, it has grown almost 10x as to what it was. Clearly, there is growth in the premium coming from weeks other than current and next week. But is it the place where we would like to be? No, we want to grow further. It is taking time because the headwinds, as you know, including the current RB circular are playing in a large way as returning to growth. But hopefully, we will reach that because of the advocacy efforts that we are putting in towards the market. In terms of market share, we do not measure our success in terms of market share, as I have repeatedly talked about. What we find is our volumes in terms of premium has been showing a consistent growth. And in terms of what you are looking for as a proportion to what Ndes,inging it as market share. We find that proportion is also going up. But we are not tracking that because that is not our primary goal. Our primary goal, as I always say, is deepening and broadening of markets. The number of participants significantly increased. Today, more than 610 members regularly participate around 650 FIs are part. Our target, as I have always been telling at least to take this number to 0. We are working on those parameters and we hope we will achieve it so. Hope I have answered your question.