BSE shares rise as Motilal Oswal upgrades rating to buy with Rs 4,000 target

The short version

• BSE shares rose as much as 5% after Motilal Oswal upgraded its rating to "Buy".
• The brokerage raised its target price to Rs 4,000 from Rs 3,480 on improving trading activity.
• Higher turnover and rising margins could lift earnings, though actual growth depends on sustained trading volumes.

BSE shares climbed as much as 5% on October 26 after Motilal Oswal upgraded the stock from "Neutral" to "Buy" and raised its target price to Rs 4,000. The revised target is about 23% above the previous Friday's closing price, according to the brokerage's estimates.

At around Rs 3,355, BSE shares were trading 3.9% higher during Monday's session. The stock was among the top gainers on the Nifty 50 at the time. The upgrade followed a period of weaker trading activity earlier in the year, with the brokerage pointing to a recovery in turnover and changes to market trading rules.

Motilal Oswal's revised assessment rests on several factors. Notional Average Daily Turnover (ADTO) has recovered from its August lows, BSE has increased its share of cash market trading, and its mutual fund and co-location businesses provide additional sources of earnings.

Why Motilal Oswal upgraded BSE

Motilal Oswal moved to a "Buy" rating from "Neutral", its first upgrade of BSE in nearly 18 months. The brokerage had downgraded the stock in June 2025. Along with the rating change, it increased its target price by Rs 520, from Rs 3,480 to Rs 4,000.

A major reason behind the upgrade is the recovery in trading activity. BSE's notional ADTO rose 85% in October so far compared with the lows recorded in August. Higher turnover can increase transaction related revenue for an exchange, although the final effect on profit depends on the mix of trades, pricing and operating costs.

The brokerage also pointed to the partial reversal of the Closing Auction Session rules, which is scheduled to take effect from December 7. It views the regulatory change as a potential driver of trading activity. The actual effect will depend on how market participants respond once the revised rules take effect.

BSE share price and target price

The revised target price indicates that Motilal Oswal expects further gains from the levels used in its valuation. However, the target is a brokerage estimate, not a guaranteed future price.

Particulars	Details
BSE share price during Monday's session	Rs 3,355
Intraday rise	Up to 5%
Gain at the reported price	3.9%
Previous target price	Rs 3,480
Revised target price	Rs 4,000
Increase in target price	Rs 520
Implied upside from Friday's close	23%
Analyst consensus implied upside	12.4%

The two upside estimates use different reference points and reflect different calculations. Motilal Oswal's 23% estimate is based on Friday's closing price, while the 12.4% figure comes from the consensus price targets of analysts covering BSE. They should not be treated as identical forecasts.

Trading turnover is recovering

Notional Average Daily Turnover measures the value of trading activity over an average day. For an exchange, higher turnover can support transaction revenue because more market activity can generate more trading fees and related income.

BSE's notional ADTO rose 85% in October compared with the August lows, according to Motilal Oswal. The recovery gives the brokerage a reason to revise its earnings estimates. However, a monthly recovery does not by itself establish that higher turnover will continue through the rest of the financial year.

The upcoming change to the Closing Auction Session rules is another factor to watch. The partial reversal is scheduled to take effect on December 7. Its effect on trading volumes and the distribution of activity across market segments will help determine whether the recent recovery lasts.

BSE gains share in cash and premium turnover

BSE's position in premium turnover has improved, according to the brokerage. The exchange has reached a 30% share of premium turnover, and Motilal Oswal expects that proportion to rise further.

Its cash market share has also increased from 7% to 9%. This measure is separate from premium turnover, so the two percentages describe different parts of the trading business and should not be compared directly.

Further growth in these market shares could support BSE's earnings if the exchange maintains the gains and the underlying trading activity remains healthy. Competition between exchanges and changes in trading patterns remain relevant factors in assessing whether the gains can continue.

Another potential development is the planned listing of the National Stock Exchange (NSE) and the opening of its lock in period in March 2027. Motilal Oswal sees this as a possible catalyst for higher turnover at BSE. The brokerage's view is an expectation, and the timing and effect of the event remain factors for the market to assess.

BSE's place in the benchmark index is also relevant to market attention. The exchange was included in the Nifty 50 in a reshuffle that replaced Wipro, a development covered in this BSE inclusion in the Nifty 50 article. Index membership and trading activity are separate factors, and inclusion alone does not determine future earnings.

Earnings estimates rise for FY27 and FY28

Motilal Oswal raised its profit after tax estimates for BSE for financial years 2027 and 2028 by 10% and 12%, respectively. The revisions reflect the brokerage's expectations for trading activity and profitability.

A further increase could be possible if turnover remains strong and the premium to notional turnover ratio improves. Motilal Oswal estimates that these conditions could support a further 20% increase in its FY28 profit after tax estimate. This is a scenario outlined by the brokerage, not a confirmed earnings outcome.

The earnings outlook also depends on how effectively BSE converts additional activity into profit. Trading volumes can change with market conditions, while operating costs and the mix of business affect the amount of revenue that reaches the bottom line.

BSE's margin outlook

Motilal Oswal expects BSE's earnings before interest, taxes, depreciation and amortisation (EBITDA) margin to reach around 70%. The brokerage cited a margin of 65% in FY26, compared with only 9% in FY21.

The improvement reflects the change in BSE's profitability over the period covered by the estimates. Higher operating leverage can help an exchange increase profits when revenue grows faster than costs. However, the projected 70% margin is an expectation, and the actual result will depend on revenue growth and expenses.

BSE's Star MF platform and co-location business also provide earnings sources beyond its main trading activity. Star MF is associated with mutual fund transaction services, while co-location services support market participants that need access to exchange infrastructure. These businesses can broaden the sources of income, although the supplied figures do not break down their individual contributions to profit.

How analysts view BSE shares

Analyst opinion remains divided despite Motilal Oswal's upgrade. A total of 20 analysts cover BSE, with most holding a positive rating, while the rest are split between neutral and negative views.

Analyst rating	Number of analysts
Buy	13
Hold	4
Sell	3
Total	20
Consensus target implied upside	12.4%

The distribution shows that 13 of the 20 analysts have a "Buy" rating. Four recommend holding the stock, while three have a "Sell" rating. The consensus target implies an upside of 12.4% from the reference level used in the estimate.

This broader view is less optimistic than Motilal Oswal's individual 23% upside estimate. Differences can arise from the target prices, valuation assumptions and earnings forecasts used by individual analysts. A rating count alone does not reveal the risks or assumptions behind each estimate.

For further context on how brokerage views can change following company developments, readers can review this Motilal Oswal stock upgrade involving another listed company. The underlying businesses differ, so the targets and operating factors are specific to each stock.

What investors should watch

The next phase of BSE's performance will depend on whether the recovery in trading activity translates into sustained earnings growth. The December 7 change to the Closing Auction Session rules is an upcoming event, while the planned NSE listing and lock in opening in March 2027 are further developments identified by Motilal Oswal.

Investors will also be watching BSE's cash market share, premium turnover share and EBITDA margin. The brokerage's FY27 and FY28 profit estimates will be relevant benchmarks as fresh financial information becomes available. Any gap between actual results and those estimates could affect how the market assesses the Rs 4,000 target.

Frequently asked questions

Why did BSE shares rise on October 26?

BSE shares rose as much as 5% on October 26 after Motilal Oswal upgraded its rating from "Neutral" to "Buy". The brokerage raised its target price to Rs 4,000 from Rs 3,480, citing higher turnover and an improving earnings outlook.

What is Motilal Oswal's target price for BSE shares?

Motilal Oswal set a target price of Rs 4,000 for BSE shares, up from Rs 3,480. The revised target implies about 23% upside from Friday's closing price, based on the brokerage's calculation.

What is BSE's share price in the latest update?

BSE shares were trading at around Rs 3,355 during Monday's session, up 3.9% at the reported level. The stock had risen as much as 5% intraday.

Why did Motilal Oswal raise its earnings estimates for BSE?

Motilal Oswal cited an 85% recovery in notional ADTO from August lows, BSE's 9% to 7% improvement in cash market share?