This is more like a sequel to my early posts on BSE when I celebrated the fact that it has gone up to around 850 odd levels in May 2021 and then again sometime last month when it crossed 1600. However, when yesterday it cruised past 2300, all the way from about 400 in this year itself, my wife insisted I ask myself if there’s anything else I’d like to add. So here’s my two cents, maybe four:
First of all, this has been a massive price movement in the stock. It’s up almost 55%+ in less than a month and there’s nothing even a massive market selloff could do to it’s one side move. Now the real questions are three? One, if it has gone up too high. Two, if it’s a buy or a sell here and last, how high can it go.
First things first. Yes, BSE has had a massive run in the last six months, more than tripling from 600 odd levels. However, if you see that it came with it’s IPO in 2017 February, and got listed at around 1000, it has only doubled in just under five years. So the run isn’t that great. Even from when I first bought it in 2018 at around 735 levels, it’s basically triple in three years. So it’s only optically making up for all those years when it languished at sub 500 levels and nobody wanted to touch it even when the entire market capitalisation of BSE was less than the cash it had on its books. Yes, it happened. Check my earlier posts for details. Also, now let’s see how costly has BSE become. As we have compared it earlier with NSE, it’s still trading at 5% of what NSE might get listed at. It’s closing maket cap yesterday is just over 10000 crores while NSE might very well debut at 200000 crores.
Secondly, if just by being a platform play makes you get valuations north of 50000crores with low to nil profits( read Paytm, Zomato, PB etc), how come India’s best platform stories can’t be valued at 50000 crores with a permanent cash making machine at its disposal? Any money coming to the markets can only come via either the NSE or BSE. And if you’re following it’s turnover data, things are looking better in most segments, including commodity where it’s daily turnover has crossed 5000crores.
The only way to value a stock is by comparing it’s current market capitalisation with what can possibly be over next decade or so. And my estimate has always been that BSE is not a four digit stock but a five digit stock. Ye Maruti nahi, MRF banega!
Now let’s see if it can go up still higher. Well, ownership by Mutual Funds and FII is hardly significant in this stock. Now that it has zoomed up to market cap of 10k crores, my hunch is it will not only be lapped up by institutions but also get a place in some of broad market indices, which will enable additional passive funds flowing in. This is a virtuous cycle which allows stock to stay and move up sharply. Just see how Bajaj Finance went up from 200 odd levels to now 7000levels in a decade. Fund managers have to jump over each other to buy anything which goes up in order to mimic the market and if they’re not buying one of the best stocks in a falling market, how will they sound genius on TV?
Is it still a buy right now? The short answer is Yes. Long answer is what I always say- if you think it’s going to be worth more three years from now and can handle price gyrations in between, buy it. Ofcourse this rally will end at some point and there will be 20-30-40% cuts as it matures. But that’s all part of the game. If you can’t handle 50% price drops, don’t invest.
So now my own take. The feeling is surreal with one stock taking care of the portfolio in a falling Market. It would have been a brutal fall had I not been holding BSE. Though this has been exactly what I learnt from Nick Sleep. He bought Amazon and never sold. So even if everything else goes to zero and Amazon goes up 100x, he did retire a billionaire. The key is to have sufficient quantity so that one BSE becomes an Amazon, your networth moves to nine figures.
Life is all about Compounding! 