Transaction charges dominates

revenue mix, other streams emerging strongly  Transaction income for NSE has been primarily driven by volumes, backed by innovative products and superior tech.  NSE commands strong pricing power, but has not been resorting to significant pricing actions. From Apr’23, NSE rolled back its 6% hike (implemented at the time of Covid-19) across its product segments. NSE introduced uniform transaction fee for brokers across segments w.e.f. 01 Oct’24 to adhere to SEBI’s true to label regulation. We expect pricing to be stable from here.  On the other hand, listing fees is a steady revenue stream with growth continuing to accrue from the increasing number of listings.  With increasing AUM of ETFs in the country (38% CAGR over the last five years), the index creation and data-related revenue would continue to see healthy momentum. ETFs surpassed 200th listing during 4QFY24. The daily average turnover in ETFs stood at INR15.5b during YTDFY25 and grew by 144% YoY.  Globally, for exchanges, the share of data-related income is much higher than that of NSE. Over the medium term, we expect strong momentum, given the company’s new initiatives, such as empanelment with Association of Portfolio Managers (APMI), increasing focus on moving up the value chain by launching analytical products on trading data feed among others.  Enhanced traction in the debt segment, expansion of revenues in the data segment, and partnerships like the one with SGX in Gift City can significantly drive NSE’s revenue growth over the medium term. NSE IX post commencement of full-scale operation has turned EBITDA positive and has also posted profits.  NSE is in the process of moving out of non-core businesses. In this regard NSE has signed definitive agreement to divest the technology business which included digital business of NSEIT along with NSEIT’s subsidiary companies.

Regulatory moves to have transitionary impact, albeit strong financial performance to continue  True-to-label charges, F&O regulations, and consultation papers on treasury income of clearing corporations to be passed on to the customers are likely to impact volumes and profitability. We expect volumes to decline from Dec’24 and have a short-term impact on earnings of the company.  We foresee 15% revenue CAGR over FY24-27E, largely led by the ~16% CAGR in transaction income, owing to exponential growth in retail volumes. The overall growth will be primarily driven by F&O volumes.  The NSE Board received approval from shareholders via postal ballot for issue of four bonus shares for existing one share held.  We expect margins to continuously inch up, led by high operating leverage and expectations of an increase in the share of Data Feed/Index Licensing services. Therefore, we project an improvement in EBITDA margin to 80.1% in FY27 from 66.8% in FY24, implying ~22% CAGR each for EBITDA/PAT over the same period.

Key risks

 Technology/server failures & high regulatory interventions: Any irregularities in the servers could halt trading on the platform, thereby impacting the NSE’s volumes. Moreover, it could also damage its reputation. In Oct’12, NSE had to suspend trading activities due to server failures. Since then, the platform has been operating on multiple servers.  Loss in market share: In the derivatives segment, BSE has emerged to be a competitor with 25%+ market share in the options segment notional turnover. Further increase in market share can be detrimental to NSE.  Adverse verdicts in legal cases: NSE has been embroiled in multiple legal cases over the past decade. Any adverse judgments on these cases leading to incremental penalties can have adverse financial implications. December 2024 112

SWOT analysis

Strengths
An undisputed market leader in equity and derivative segments Asset-light model supports high cash conversion rate With disproportionate market share and liquidity provided by NSE, it shall continue to maintain its dominant position

Weakness

Higher dependency on transaction revenue (options revenue) to drive profitability Negligible market share in the commodity segment  Impact of co-location case on overall profitability.

Opportunities

Diversification of revenue from other segments to reduce dependency

Structural growth in capital markets (growth in Demat accounts, PAN cards, NSE active clients, etc.)

 Increasing financialization of household savings

Retail investor participation is on the rise, as the perception of Indian equity markets is evolving, with the younger generation believing that equity markets provide an opportunity to earn Alpha.

Threats

Technology risk and cyber security attacks

 Impending penalty on colocation case

Unfavorable regulatory interventions and decision

Good morning

OBEROI REALTY LIMITED Company details

Oberoi Realty Ltd is a real estate development company operating in Mumbai, focused on premium developments. The company's focus is residential projects, but they also have a diversified portfolio of projects covering segments of the real estate market, like commercial, retail, social infrastructure and hospitality projects. The company has developed over 47 projects at strategic locations across the Mumbai skyline aggregating ~13.6 million sq. ft of spaces (group entity including promoter group) with another 29.7 million sq. ft. (carpet area) in the making as of March 2024. They have aggressive plans for upcoming projects in various parts of Mumbai and other regions. In order to achieve the scalability required to undertake large developments, they outsource work to leading international and domestic consultants in the areas of architecture, design, engineering and construction. The company appointed Samsung C&T Corporation as its general contractor for the iconic high-rise mixed-use project in Worli Mumbai. Revenue from real-estate contracts is recognized over a period of time in accordance with the requirements of Ind AS 115 using the percentage of completion method.

The Group’s investment properties consist of 5 commercial projects in Mumbai. It consists of Commerz I, Commerz II, Oberoi International school (Goregaon), Oberoi International school (JVLR) and Oberoi Mall. Investment properties are rented to tenants and are not intended to be sold in the ordinary course of business. The company also has 269 keys of The Westin Mumbai Garden City (Hospitality segment) with an ARR (average room rate) of ₹12,224, RevPAR (revenue per available room) of ₹10,190 with 83% of occupancy in Q1 FY25

#SALES #GROWTH 5 Year CAGR: 11.7%

In FY24, the company booked 704 units across the carpet area of 10,74,825 sq ft with a booking value of ₹3,996 cr. The revenue registered during the year was ₹4,496 cr. The RERA carpet area sold during FY23 was 16.75 lakh sq ft. The average implied realization increased from ₹30,539/sf in FY23 to ₹37,449/sf (up by 22.6% YoY) in FY24 which is largely due to the release of high-rise inventory. The company has launched ‘Forestville’ the first luxury residential project in Kolshet, Thane. It received occupation certificate for Sky city towers. It launched tower C in Elysian project at Oberoi Garden City. In Q1 FY25, company has booked 139 units across the carpet area of 2,10,783 sq ft with a booking value of ₹1,067 cr up by 124% YoY. The revenue registered was ₹1,405 cr up by 54% YoY. They received occupation certificate for Commerz III (2.4 million sq ft of carpet area) which is already 70% leased out. The company is gearing up for Pokhran, Thane launch along with towers in Goregaon and Borivali during the upcoming festive season.

#EBITDA #GROWTH 5 Year CAGR: 15.8%

In FY24, the EBITDA stood at ₹2,410 cr which increased by 14% YoY. This was due to higher realizations. In Q1 FY25, the EBITDA registered were ₹815 cr regsitering a growth of 72% YoY.