BSENSEQ2 FY 2023November 10, 2022 BSE Limited
4,916words
78turns
7analyst exchanges
1executives
Management on call
Anand
Sethuraman
Head (Investor Relations), BSE Limited. Thank you, and over to you, sir.
Key numbers — 40 extracted
Rs. 240
crore
market conditions, the BSE Group delivered a stable financial performance with total revenues of Rs. 240 crores for Q2 FY '23, a growth of 6% as compared to corresponding quarter last year. BSE's operational
6%
d a stable financial performance with total revenues of Rs. 240 crores for Q2 FY '23, a growth of 6% as compared to corresponding quarter last year. BSE's operational revenues have grown by 5% to Rs
5%
th of 6% as compared to corresponding quarter last year. BSE's operational revenues have grown by 5% to Rs. 198 crores from Rs. 189 crores in the corresponding quarter of the previous year. BSE net
Rs. 198 crore
6% as compared to corresponding quarter last year. BSE's operational revenues have grown by 5% to Rs. 198 crores from Rs. 189 crores in the corresponding quarter of the previous year. BSE net profit attributab
Rs. 189 crore
rresponding quarter last year. BSE's operational revenues have grown by 5% to Rs. 198 crores from Rs. 189 crores in the corresponding quarter of the previous year. BSE net profit attributable to shareholders o
Rs. 34 crore
uarter of the previous year. BSE net profit attributable to shareholders of the company stands at Rs. 34 crores as compared to Rs. 65 crores in the corresponding quarter of previous year. The decline is becau
Rs. 65 crore
BSE net profit attributable to shareholders of the company stands at Rs. 34 crores as compared to Rs. 65 crores in the corresponding quarter of previous year. The decline is because of the added contribution
Rs. 36 crore
decline is because of the added contribution to the core settlement guarantee fund to the tune of Rs. 36 crores at a consolidated level, which is an increase of 485% as compared to corresponding quarter last
485%
ment guarantee fund to the tune of Rs. 36 crores at a consolidated level, which is an increase of 485% as compared to corresponding quarter last year. I would now share some of the key financial num
67%
nding quarter of the previous year: The clearing and settlement operational revenues increased by 67% to Rs. 16.9 crores from Rs. 10.2 crores. Treasury income from clearing and settlement funds has i
Rs. 16.9 crore
uarter of the previous year: The clearing and settlement operational revenues increased by 67% to Rs. 16.9 crores from Rs. 10.2 crores. Treasury income from clearing and settlement funds has increased by 71% to
Rs.
10.2 crore
s year: The clearing and settlement operational revenues increased by 67% to Rs. 16.9 crores from Rs. 10.2 crores. Treasury income from clearing and settlement funds has increased by 71% to Rs. 22.9 crores from
Guidance — 6 items
“We expect IPO activity to pick up in the second half of FY 2023.”
“India INX has about USD 70 million medium-term note established and about USD 50 million of bonds listing till date.”
“The volume traded at HPX, that is Hindustan Power is relatively modest and the exchange is continuously onboarding new members and exploring new products to be launched, which can result in higher volumes going forward.”
“So, this is 1 quarter thing, or it will be now recurring, and this gross run rate would be similar in this range?”
“Obviously, it will have some incremental expenses also, but they will be slightly less than what we are recovering.”
“See, in the best-case scenario, we can expect a return of around 6.5%.”
Risks & concerns — 7 flagged
I'm happy to inform that despite the volatile market conditions, the BSE Group delivered a stable financial performance with total revenues of Rs.
— Nayan Mehta
The decline is because of the added contribution to the core settlement guarantee fund to the tune of Rs.
— Nayan Mehta
After record breaking-turnover in FY '22, volatile market conditions have resulted in slowdown during the first half of FY'23.
— Nayan Mehta
Facing the challenges of volatile market environment, BSE's performance in trading segment was muted, but currency, mutual funds and insurance segment demonstrated strong growth.
— Nayan Mehta
And again, there was always a risk of further depreciation considering the vibes we are getting on with respect to the happenings in U.S.
— Nayan Mehta
And in this StAR MF, obviously, there is increase in the realization, but excluding the pass-through, are we seeing additional pricing pressure from mutual funds or were stable from the mutual fund side?
— Amit Chandra
Amit, there is no pressure on the mutual fund side because our charges are very, very low.
— Nayan Mehta
Q&A — 7 exchanges
Q
Just 2 questions from my side. Firstly, could you give some clarity on the SGF thing, why we had to pay such a large amount in this quarter? Any guidance for the full year?
Nayan Mehta
Hello, Prayesh. The Settlement Guarantee Fund is basically determined by various factors, which is stipulated by the SEBI guidelines, and it is basically derived out of the volumes in any segment, the concentration of positions in any segment, the volatility in that segment. So, during the last quarter, our currency derivatives volumes increased significantly as compared to earlier periods. Because of that, it necessitated that the core SGF as determined and computed according to the guidelines of SEBI has increased. And that is why ICCL, our clearing corporation, had to make a contribution of
Q
Many thanks for giving the opportunity for the questions. First, I would like to thank all the respected members of BSE for making it India's best exchange. I have a very small question. Is there any plans of listing of any of the subsidiaries of BSE in near future?
Neeraj Kulshrestha
No, there are no such plans.
Q
My first question is you did mention that other expenses are up on account of SGF contribution, but the increase that we see on a sequential basis is almost Rs. 45 crores, while the SGF contribution is Rs. 36 crores. So, is there any other one-off as well in this number?
Nayan Mehta
So, Devesh, other than the SGF, the increase is also on account of increase in clearing house charges. So, since the number of transactions which happen on BSE to the extent, they get cleared by NCL or by ICCL. So, obviously, BSE has to pay clearing house charges. So, those are the ones which have increased by about Rs. 4.5 crores. Also, there was an increase in professional fees, which I just mentioned earlier, because to offset the income which we are receiving from the mutual fund segment. So, these are the 2 main reasons why our expenses have increased, other than SGF. And would you be abl
Q
Thanks for the opportunity. Sir, you mentioned about the hike in existing fees, it’s applicable from 1st of April. So, the fees were hiked up for all companies or only for exclusive companies? And what's the rationale behind it because we already have increased it in the past and it is at par with NSE. So, are you planning to increase it higher from here?
Girish Joshi
Fees will increase marginally for all companies and some companies where the market cap is higher, we have linked fees to the market cap for a highly capitalized company. So, Amit, it is like this, it is the industry practice. Now the competition exchange also leverages the listing fees based on market cap. Earlier, we were charging it on the basis of the equity capital. And so, this is one improvement which we have made in our revenue profile. 9 BSE - PUBLIC And every few years what happens because of the increase in regulatory activities that are expected on all these companies. So, this is
Q
Thank you again, sir, for the opportunity. Just 2 questions from my side. I missed your comments on the KRA business. So, what is the update here, sir?
Neeraj Kulshrestha
So, KRA business, we have gone live with the business. And so, we are live. We are one of the KYC KRA participants now in the industry and we are offering our services. And now this business, we will take this forward. Sir, CDSL is one of the leading KRA where we own 20% stake. So, why have we thought to go through separately in this business? Any thoughts around that? So, in this particular thing, see, what happened is there was this whole background where SEBI itself wanted exchanges to also consider this activity. So, therefore, all exchanges. Now what we 11 BSE - PUBLIC realized is that as
Q
12 BSE - PUBLIC What would be your free cash on the balance sheet as of date?
Nayan Mehta
Prayesh, on a stand-alone basis, it is about Rs. 1,376 crores. This is available to investors, right? Yes. And secondly, longer term as from a 3 to 5-year perspective, do you see any of these new products that we've spoken so much about, your INX, your gold receipts, power exchange, derivatives, any of these contributing or together contributing to, say, 15%, 20% of the revenues? How should we think about it somewhat say, a 3-to-5-year perspective from these products, particularly? Prayesh, each of the segments is a gold mine. The thing is that its time has to come. See, we are in a very uniqu
Q
Thank you so much and thank you all for being here today. Do know that should you have any further questions, or you need any particular information or data, please reach out to us, or write to us at bse.ir@bseindia.com. Thank you so much.
Opening remarks
Anand Sethuraman
Thank you so much. Good evening, everyone. This is Anand from BSE Investor Relations, and welcome to BSE's Earnings Call to discuss Q2 FY 2023 Results. Joining us today on this earnings call is BSE's leadership team consisting of Mr. Nayan Mehta, Chief Financial Officer; Mr. Neeraj Kulshrestha, Chief Regulatory Officer; Mr. Sameer Patil, Chief Business Officer; Mr. Girish Joshi, Chief of Trading Operations and Listing Sales and Mr. Kersi Tavadia, Chief Information Officer. Do note that the conference is being recorded and a transcript of this call will be made available on the BSE website. Before we get started, I will have to take this opportunity to once again remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Any forward- looking statements that we make on this call are based on assumptions as of today, and BSE assumes no obligation to update these statements as
Nayan Mehta
Thank you, Anand. Good evening, everyone, and thanks for joining the call today. I hope all of you and your loved ones are safe and keeping well. Before I start with the update, I am glad to say that BSE continues to function normally without any interruptions and glitches and has been able to improve its revenues. We are also pleased to inform you that BSE Group continues to expand its activities to service its clients and the economy on the back of the strength of its integrated and diversified model. In Q2 FY '23, BSE has expanded its platform offerings to launch Electronic Gold Receipts and KYC KRA to service the Indian capital markets and the economy. Let me now start with the financial update. I'm happy to inform that despite the volatile market conditions, the BSE Group delivered a stable financial performance with total revenues of Rs. 240 crores for Q2 FY '23, a growth of 6% as compared to corresponding quarter last year. BSE's operational revenues have grown by 5% to Rs. 198
Anand Sethuraman
Thank you so much, sir, for this update. With this overview, let me now welcome you once again and invite you all for the question-and-answer session. Thank you.