BSE shares surge 4.6% as Motilal Oswal upgrades stock to buy, sets ₹4,000 target

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The stock hit an intraday high of ₹3,379.30 on the NSE before trading at ₹3,370.50 at 12.21 pm.

By Madhu Balaji

Updated - October 26, 2026 at 12:33 PM. | Bengaluru

BSE shares surged 4.59 per cent on Monday after Motilal Oswal upgraded the stock to buy (at a target price of ₹4,000), citing an expected recovery in derivatives volumes following the partial reversal of the Closing Auction Session (CAS) framework and potential gains in cash-market activity following the listing of the National Stock Exchange (NSE).

The stock hit an intraday high of ₹3,379.30 on the NSE before trading at ₹3,370.50 at 12.21 pm.

BSE shares surge

The brokerage expects the recovery in derivatives trading volumes, improving market share and growth in other businesses to support BSE’s earnings growth.

Derivatives recovery

Motilal Oswal said BSE’s futures and options (F&O) notional average daily traded turnover (ADTO) surged 85 per cent in October 2026 month-to-date, compared with the 34 per cent month-on-month decline following the CAS reset in August 2026.

The brokerage said the partial reversal of CAS, effective December 7, 2026, provides a regulatory catalyst for the recovery beyond the current volatility-led increase in volumes.

Motilal Oswal expects BSE’s FY27 ADTO to reach ₹216 trillion, representing 16 per cent year-on-year growth, with further upside potential if the recovery continues.

The brokerage noted that BSE has achieved a market share of more than 30 per cent in premium turnover, while further expansion remains possible. The premium-to-notional ratio has increased to around 14 basis points from 6-7 basis points in 2023-24, compared with more than 20 basis points for NSE.

According to Motilal Oswal, further convergence in this ratio, driven by institutional participation and longer-dated contracts, could provide additional earnings upside beyond volume growth.

Cash market growth

Motilal Oswal said BSE’s cash-market share has improved from around 7 per cent to around 9 per cent. The brokerage identified NSE’s listing and the opening of its lock-in in March 2027 as potential catalysts for higher cash-market turnover.

Improving smart-order routing and platform participation could also support a sustained increase in cash-market activity. The brokerage expects BSE’s average daily traded turnover to grow at a compound annual growth rate (CAGR) of 30 per cent between FY26 and FY28.

The brokerage also highlighted growth in BSE’s Star MF platform, with quarterly transactions increasing from 12 million in the first quarter of FY20 to 245 million in the second quarter of FY27. The platform generates more than ₹800 million in quarterly revenue.

Co-location contributes ₹450-480 million per quarter, with further capacity and pricing headroom, according to Motilal Oswal.

Motilal Oswal said BSE’s operating model offers scope for strong profit growth as revenue increases. The exchange’s EBITDA margin expanded to more than 65 per cent in FY26 from 9 per cent in FY21. The brokerage expects margins to reach 70%.

It forecasts a roughly 27 per cent compound annual growth rate in profit after tax (PAT) between FY26 and FY28, alongside revenue growth at a CAGR of 23 per cent. Motilal Oswal also noted that regulatory costs, which account for 55 per cent of operating expenses, provide a degree of insulation against volume slowdowns.

The brokerage raised its revenue estimates by 8 per cent and 10 per cent for FY27 and FY28, respectively. It increased its PAT estimates by 10 per cent for FY27 and 12 per cent for FY28, supported by the strong volume run-rate, the expected benefit of the CAS reversal and the potential impact of NSE’s listing on cash-market volumes.

Motilal Oswal said a sustained volume recovery, combined with an improving premium-to-notional ratio, could drive a further increase of around 20 per cent in FY28 estimated PAT.

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Published on October 26, 2026

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