Can BSE Limited shares fall to Rs 300? The SEBI decision that could change everything

new delhi: BSE Limited’s shares have been in a sharp downward spiral over the past few days following reports that the Securities and Exchange Board of India (SEBI) may move to reduce the number of expiry days in equity derivatives. This potential regulatory shift could fundamentally alter BSE’s current growth trajectory — and, in turn, its market valuation.

From Boom to Pressure

In the last three years, BSE’s market capitalisation surged more than 30 times, fuelled largely by a favourable SEBI regime that, intentionally or otherwise, created tailwinds for BSE while constraining NSE at both policy and operational levels.

This bullish run pushed BSE’s valuation to extraordinary levels, with its price-to-earnings (P/E) ratio touching 100 — far above what is generally seen for fee-based exchange businesses. Following the recent correction, the P/E has slipped to under 75.

The Re-rating Risk

The real concern for investors is the possibility of earnings contraction. If profits stagnate and valuations revert to more reasonable levels — historically, pure-play fee-income exchanges trade at forward P/Es of 20–25 — the share price could face a sharp re-rating.

On that basis alone, assuming no profit growth over the next few years, a P/E compression from 75 to 25 would imply a share price drop to roughly one-third of its current level. That would take BSE from about ₹2,200 today to the ₹700–₹750 range.

The Derivatives Factor

However, the bigger risk lies in SEBI’s potential move to replace weekly derivatives with monthly or fortnightly expiries. Such a change could reduce BSE’s derivatives trading volumes by at least 50% — and its profits by over 60%, given the high operating leverage in exchange businesses.

If that scenario plays out, and BSE’s earnings are cut sharply, even a generous P/E of 20–25 could imply a price well below ₹300 — an 85% collapse from current levels.

The Decisive Trigger

The fate of BSE’s stock now hinges almost entirely on SEBI’s regulatory decision. If weekly expiries survive, the current correction may stabilise. If they are removed, however, BSE could be staring at a long, painful valuation reset.

The question for investors is simple: Will SEBI change the rules of the game — and if it does, how quickly will the market reprice BSE’s future?