Equity | India | Stock Exchange

IPO BSE Ltd.(BSE)

Note Recommendation: SUBSCRIBE January 19,2017

Details of the Issue Company Background

Price Band `805 `806 BSE Limited (BSE) is India's largest stock exchange by number of companies listed. The Bombay Stock
Issue Size `12,434mn Exchange was established in year 1875 as the first stock exchange in Asia. BSE has over 5000
Opening Date Jan 23, 2017 companies listed on it, the highest in any exchange around the world. Worlds two leading global
Closing Date Jan 25, 2017 exchanges, Deutsche Bourse and Singapore Exchange are strategic partners of BSE. BSE offers trading
Face Value `2 in Equity, Debt Instruments, Derivatives, Mutual Funds and SME Equity. The S&P BSE SENSEX is India's
Bid Lot 18 most widely tracked stock market benchmark index. BSE also offer services including risk
Listing on NSE
management, clearing, settlement, market data services, IT services and solutions, licensing index
products such as the S&P BSE SENSEX and financial & capital markets trainings.

Objects of the Issue

Strong brand recognition with a track record of innovation
To achieve the benefits of listing the Equity
Shares on the Stock Exchange and To carry out Established in 1875, BSE is Asia's first stock exchange, and it is one of the most recognizable brand
the Offer for Sale. names in India. BSEs global brand helps in attracting companies to their listing platforms and
attracting retail investors and wholesale participants to various market and data offerings. As of
Lead Managers June 30, 2016, BSE is the world's largest exchange by number of listed companies and India's largest
Axis capital, Edelweiss, Jefferies, Nomura and the world's 11thlargest exchange by market capitalization, with US$ 1.52 trillion in total market
capitalization of listed Companies. According to CARE Research, the BSE ranks third globally in terms
Registrar of currency options and futures contracts traded in 2015, with 430 million currency derivatives
traded, a 103% increase from FY 2015.Further, turnover from the interest rate derivatives market
"Karvy computer share private Ltd.
grew from $26 billion in FY2014 to $1,141 billion in FY 2016.
Investment Details
No. of shares at Diversified and integrated business model and active relationship with market participants
234
cut-off The company operates a diversified and integrated business model including trading, clearing and
Max. Amount to settlement of products listed and traded on the BSE, as well as the provision of data products, IT
188,604
be paid (`) services and solutions, index products and training. BSE offer listing and trading of a wide variety of
products including equity cash securities such as shares in companies and ETFs, units in closed-end
Source: RHP, GEPL Capital Research
mutual funds, corporate bonds and government securities, equity derivatives and currency
derivatives, as well as services such as securities lending and borrowing, and platforms to facilitate
offers to buy securities by listed companies and offers for sale of securities by substantial
shareholders of listed companies. By providing such integrated services, they support market
participants and members throughout the entire life-cycle of a trade. Such an integrated
approach benefits and keeps costs low for participants and members by providing efficiencies that
are associated with having a wide range of services integrated under one entity.

Strong State-of-the-art infrastructure and technology

The company has electronic systems for entry, trading, clearing and settlement and depository
services and continually seek to improve core IT capabilities, the reliability and consistency of which
help them to maintain competitive position. BSEs electronic systems include (i) BOLT+, a fully-
automated online trading platform through which all trades on the equity cash, equity derivatives and
currency segments of exchange are executed, and (ii) precision time protocol, a time
synchronization standard that adopted to ensure accurate and reliable time synchronization across
trading infrastructure. It has also implemented functional improvements to infrastructure and
technology, including tick-by-tick order data, multi-legged orders, and "straddle" strategies for
currency derivatives and equity derivatives. Furthermore, all of our platforms are
interconnected and operated through the same network and workstation, which helps to provide
market participants with a seamless experience and efficient operations.
To boost investor confidence and transparency, the company has also implemented real-time risk
management system, which conducts real time calculations of members' margins and limits. They
also use the standard portfolio analysis of risk (SPAN) margin system, an industry-standard margin
system used by over 30 exchanges and clearing organizations worldwide that is designed to evaluate
the overall risk in a portfolio and accurately match margins to risk

GEPL Capital Research 1

 Equity | India | Stock Exchange

BSE Ltd.(BSE) January 19,2017

Key Risks
The Broad market trends and other factors beyond their control could significantly reduce demand
for their services and harm their business, financial condition and results of operations.
There can be no assurance that will be successful in implementing current and future strategic
plans.
The company operates in a business environment that continues to experience significant and
rapid technological change.
Trading on their equity derivatives segment is less than that on the NSE and there is no guarantee
that they can successfully compete in the equity derivatives segment against the NSE.

Valuation & Recommendation

BSE Ltd.(BSE) stands to gain from operating leverage. At a P/E of 35.8 xs of FY16 EPS and 21xs of
trailing earnings. We believe that BSE Ltd. demand a discount to its domestic peers. We assign a
Subscribe rating to the IPO.

Financial Snapshot

6- Months
Particulars (`mn) FY13 FY14 FY15 FY16 ended
September
Total Income 2,739 2,668 3,611 4,265 2,422

EBITDA 3,109 2,875 3,053 3,005 1,931

EBITDA(margin) 56.2% 54.3% 48.9% 45.7% 50.4%

PAT 1,188 1,352 1,297 1,225 1,049

EPS (`) 22.5 25.6 23.8 22.5 19.2

Source: RHP, GEPL Capital Research

GEPL Capital Research| IPO Note 2

 Equity | India | Stock Exchange

BSE Ltd.(BSE) January 19,2017

NOTES

GEPL CAPITAL Pvt Ltd (formerly known as Gupta Equities Pvt. Ltd.)
Head Office: D-21/22 Dhanraj mahal, CSM Marg, Colaba, Mumbai 400001
Reg. Office : 922-C, P.J. Towers, Dalal Street, Fort, Mumbai 400001

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GEPL Capital Research| IPO Note 3