We recommended BSE with a report titled Bombay Stock Exchange (BSE): Strong Growth Ahead on 29Mar2017 and an update report titled BSE: Growing Operating Income.

Based on the BSE FY18 results, let us try to see what FY19 can bring for BSE.
1. Increase in Listing Fees Income: BSE has reported listing fees of Rs. 51 crores in Q4FY18. Based on this, we can safely assume that FY19 should report listing fees income of Rs. 200 crores on the conservative basis. A further increase is also possible and dependent upon the increase in new listings in FY19.

2. Transaction Charge Income: There is a consistent increase in the transaction charges income for BSE over the last 5 years. We understand that transaction charge income is variable and linked with market activity. However, even if FY19 witnesses lower equity volume resulting in lower transaction charge income against Rs. 158 crores in FY18, the fall if any should be set off by a new source of income coming from mutual fund transaction charge income, which BSE started collecting from Q4FY18. For instance, BSE StAR mutual fund has collected Rs. 5.1 crores of transaction income in Q4FY18 and it is quite reasonable to assume that it will contribute Rs. 12-15 crores in FY19.

3. Operating Expenses: The FY18 other expenses for BSE was higher due to one time expense of Rs. 12 crores on building repairs and maintenance. Most likely, BSE operating expenses should remain under check at around Rs. 350 crores in FY19 as shown in table above.

4. Buyback and Dividend Updates:

a) Update on Buyback: Up to 4May18, BSE has bought back 9,14,400 equity shares out of total permissible maximum quantity 15,09,090 shares at an average rate of Rs. 804 per share.

b) Dividend: BSE has declared highest ever final dividend of Rs. 31 per share in addition to Rs. 5 paid as interim dividend. For FY18, total dividend is Rs. 36 per share which translates into 95% dividend payout ratio.

Note: FY19 estimates are prepared on a conservative basis where we have considered growth only in listing fees and decrease in income considered in most other types of income.

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Dhruvesh Sanghvi is a Research Analyst registered with SEBI having registration No: INH000000875.

• Fresh Recommendation Reports: These reports are first-time initiation reports on the concerned stock. Usually these reports are followed by updates on the same.
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