Multibagger stock: Shares of BSE Ltd have seen a massive rally, rising 62 per cent in the past one year and a whopping 5,131 per cent in the past five years. After hitting a record high of Rs 3,570 this week on April 20, the stock is consolidating, making investors wonder whether further upside is possible. Equirus Securities has initiated coverage on the stock, with an 'Add' rating, but its target price suggests only single-digit upside ahead.  The brokerage said BSE has undergone a continuous re-rating over the past five years, supported by market share gains and improving profitability, and has traded at over 40 times 1-year forward earnings as per Bloomberg consensus. On Thursday, the scrip was trading 0.55 per cent lower at Rs 3,480.

"We expect valuations to sustain at these levels, supported by structural factors, including the duopolistic market structure with high entry barriers, continued growth with optionality from new derivative products and co-location revenues, and healthy profit growth (22 per cent CAGR over FY26E-FY28) with scope for further upside from volume growth and margin expansion," it said.
Equirus said stock exchanges are well placed to benefit from India’s deepening capital markets, supported by rising retail participation. BSE has expanded its derivatives offerings alongside steady growth across other segments, including cash transactions and services to corporates, the brokerage noted.

Equirus said BSE has transitioned from a listing-led, cash equity-focused platform to a derivatives-driven model, with equity derivatives contributing 60 per cent-plus of revenues. Its premium market share has scaled to 28 per cent and notional share to 42 per cent in FY26. 

This, the domestic brokerage said, has driven transaction income from Rs 240 crore in FY23 to Rs 2,480 crore in 9MFY26, marking a structural inflection.

"Volume quality has improved meaningfully, with premium-to-notional turnover up from 6-7bps to 10bps in FY26. We are building in 19 per cent CAGR in index options notional turnover and expect premium-to-notional ratio to improve to 11.6 bps by FY28E," it said.

The brokerage said operating leverage is visible in BSE, with 9MFY26 Ebitda margins at 64 per cent. It noted that BSE's revenue growth has outpaced cost growth, with margins likely to expand to 66-67 per cent over FY27 and FY28.

"BSE has built multiple scalable and high-margin revenue streams beyond derivatives. We expect 21 per cent, 23 per cent and 22 per cent revenue, Ebitda and PAT CAGR over FY26E-FY28E. Since FY27 start, BSE has rallied over 25 per cent and trades at 39 times FY28E EPS. Initiate coverage with ADD with a March 2027 target of Rs 3,765 set at 42 times FY28E core EPS," it said.