BSE Ltd

NSE:BSE

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to BSE Limited Q1 FY '24 Investor Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Anand Sethuraman, Head of Investor Relations. Thank you, and over to you, sir.

[Anand Sethuraman, executive]

Thank you so much, [ Dino ]. Good evening, everyone. This is Anand from Investor Relations, and welcome to BSE's earnings call to discuss Q1 FY '24 results. Joining us on this call is BSE's leadership team consisting of Mr. Sundararaman Ramamurthy, Managing Director and CEO; Mr. Nayan Mehta, Chief Financial Officer; Mr. Sameer Patil, Chief Business Officer; Ms. Kamala K, Chief Regulatory Officer; Mr. Girish Joshi, Chief of Trading Operations & Listing Sales; and Mr. Subhash Kelkar, Chief Information Officer. Also present here are the members of our finance and secretarial team.Do note that this conference is being recorded and a transcript of this call along with the earnings release and presentation can be found in the Investor Relations section of the BSE India website.Before we get started, I once again remind you that our remarks today will include forward-looking statements. Any actual results may differ materially from those contemplated by the forward-looking statements and any forward-looking statements that we make today on this call are based on assumptions and BSE assumes no obligation to update these statements as a result of new information or future events.With this, I will now request Mr. Sundararaman Ramamurthy, Managing Director and CEO, to give a brief overview of the company's financial and business performance in Q1 FY '24.

[Sundararaman Ramamurthy, executive]

Thanks, Anand. Good evening, everybody. Thanks a lot for joining the call today. [ It ] gives me great pleasure as always to address you all today. It has been an interesting 7 months for me since I joined as MD and CEO of BSE. As you may recall, in the last earnings call, I had informed that my primary priority is to make BSE a vibrant exchange. My priorities have not changed. We saw a good traction in segments like Equity Cash and Mutual Fund and made significant progress in the development of Equity Derivatives segment. And we continue our important work to operate more efficiently by creating durable savings to fund investments in our long-term priorities, such as building our commodity segments, adding infrastructure capacities, colocation spaces. I'll talk about this momentum, including our continued leadership in mutual funds and the evolution of BSE Equity Derivatives segment.But first, let me start with BSE's 149th Foundation Day. I'm happy to inform you that BSE on July 10, 2023 marked its 149th Foundation Day, representing a significant milestone. This auspicious occasion was met with enthusiasm as we unveiled our new logo symbolizing prosperity, vibrance, growth, and new beginnings. The genesis of the new logo reflects the vibrance that BSE aims to spread. That's exactly what we have done in our Equity Derivatives segment.As you may recall, based on member feedback, we had announced the relaunch of Sensex and Bankex derivatives contract with lower lot size and a different expiry on Friday from May 15, 2023. We had also discontinued the liquidity enhancement schemes, software services and hardware infrastructure services that were being offered for enhancing liquidity and participation.I would like to highlight the progress we have made in the 12 weeks since. For the first time in the history of BSE, a record of 6.73 crore contracts representing a notional turnover of rupees INR 44.2 lakh crores were traded on a single day. That is 4 August, 2023. Our trading systems processed over [ 50 crore ] orders and [ 1.5 crore ] trades which are higher than our Equity Cash segment. 219 members traded Sensex options on August 4, 2023 as compared to just 28 on day 1. Similarly, since relaunch more than 1.65 lakh UCC has traded Sensex options. Just 38 UCCs traded on day 1. It's still early days and we are motivated to do even better.Several large retail, prop and high frequency trading members for the first time ever in the history of capital markets are now readying systems, building necessary infrastructure and commencing, or already commenced testing and trading in BSE Equity Derivatives. We have also seen significant demand for colocation racks and associated connectivity provided by the exchange. So that might actually increase the CapEx of BSE going forward to that extent.Overall, the momentum remains strong. Adoption by all users is moving in the right direction. I'm confident that appropriate monetization and at appropriate time will follow as we move towards achieving critical mass in terms of participation, volumes and liquidity.Let me now start with the financial updates. I'm happy to inform that BSE delivered a stable quarter in terms of revenues to reach a total revenue of INR 271.2 crores for Q1 FY '24 as compared to INR 197.7 crores in Q1 FY '23, a growth of 37%. Similarly, BSE's operational revenues have grown by 15% so, INR 215.6 crores from INR 186.9 crores. The net profit attributable to shareholders of the company excluding exceptional item stands at INR 75.1 crores from INR 44 crores in the corresponding quarter previous year, which is a growth of 71%.I will now share some of the key financial numbers on a consolidated basis for the quarter ended June 30, 2023 as compared to the corresponding quarter previous year. Revenues from transaction charges increased by 23% to INR 66 crores, aided by growth in Mutual Funds segment. The clearing and settlement operational revenues increased by 41% to INR 24.1 crores. Treasury income from clearing and settlement funds have increased by 19% to INR 22.2 crores. Other operating revenue which includes data dissemination fees, training income, software income have increased by 20% to INR 21.6 crores.Investment income increased to INR 44 crores from INR 6 crores. The operating EBITDA for Q1 FY '24 stands at INR 70 crores up from INR 49.8 crores. Operating EBITDA margin increased to 32% as against 27% in the corresponding quarter last year. Similarly, the net profit margin improved to 27% from 20%.I'm also happy to inform you that BSE has completed the sale of its 5% stake in CDSL to meet with regulatory requirements with an average realization of INR 991 per share. A mixed open market and block window execution was done to ensure seamless execution and a total consideration of about INR 518 crores.In view of this stake sale, the Board has approved the share buyback of 45.9 lakh equity shares, representing 3.39% of the total equity shares in the total paid up equity capital of the company as of March 31, 2023 via a tender route. The buyback price has been fixed at INR 816 a piece, representing a premium of 34.1% over the closing price on June 30, 2023 for a total consideration of a INR 374 crores, exclusive of taxes.In total we have announced the net capital returns of rupees INR 539 crores based on a successful buyback and dividend payout of INR 12 per equity share which was announced last quarter. Both the dividend and buyback are subject to approval of shareholders in the ensuing Annual General Meeting.On the business side, let me start by covering primary market segment. Fundraising by Indian corporates picked up in June of FY 2024. BSE platforms continue to remain the preferred choice by Indian companies to raise capital. The BSE platform has enabled issuers to raise INR 4.39 lakh crores by means of equity and debt rising, bonds, commercial papers, municipal bonds et cetera.Moving on to our Trading segment. For the quarter ended June 30, 2023 the average daily turnover in Equity Cash segment stands at INR 4,025 crores which is similar to INR 4,057 crores in the corresponding quarter last year. The average daily turnover in currency futures stands at INR 13,800 crores, a decline of 20% as compared to the corresponding quarter last year, which was in line with the market volumes. As you may be aware, the BSE has revised transaction charges in the currency futures segment which are now at par with the market transaction charges. These charges are effectives from September 1, 2023.Moving on to our Mutual Fund business. BSE StAR MF continues to generate compounding revenue growth and delivered yet another quarter of record revenues and performance up 59% year-on-year to reach INR 23.8 crores. The total number of transactions processed by BSE StAR MF grew by 39% to reach INR 8.3 crores transactions in Q1 FY 24 from INR 5.9 crores in the corresponding quarter last year.BSE's market share stands at 88% among exchange distributed platforms. The BSE StAR MF has been consistently reaching new highs in terms of transactions, the platform processing and new high of 3.05 crore transaction in July 2023. On an average the platform processed over 2.76 crore transactions per month in Q1 FY '24 as compared to 1.98 crores in Q1 FY '23. This demonstrates the scalability and reliability of BSE's platform StAR MF.BSE Group directly or via subsidiaries also has its presence in other related business, including India International Exchange and -- India INX, BSE's exchange of Gift City, BSE Ebix, insurance distribution platform with Ebix Inc., the Hindustan Power Exchange, HPX, in association with PTC India and ICICI Bank, BSE e-agricultural markets, BEAM, spot platform for trading in commodities and BSE Administration and Services Limited, BASL. BSE is committed to these new areas and is constantly working with partners for the growth of these businesses. As we move forward, we see that there is a significant opportunity to continue to expand and evolve these businesses.In conclusion, me and my team are energized by the pace of innovation and the momentum across the BSE with our strong underlying momentum in Equity Derivatives and aligned focus on the right strategies. Moving forward, I remain confident that we will continue to deliver long-term growth for our shareholders and deliver on our mission of vibrant BSE 2025.With these updates, I now hand over the call back to Anand.

[Operator]

[Operator Instructions] The first question is from the line of Narendra Shah from RoboCapital.

[Narendra Shah, analyst]

So my first question will be regarding the derivative transaction charges. I mean, do you have any set targets for how much are you going to make in that segment for FY '24? If you could shed some light on it?

[Sundararaman Ramamurthy, executive]

As you may recall, we started Equity Derivatives segment, that is we relaunched on May 15, 2023. It's around 12 weeks now since the date of introduction. Typically, for a relaunched product to get into a sustained phase, normally, we expect around 6 to 10 months. The growth of Sensex derivatives has been faster. Today we are seeing a good amount of traction within 12 weeks. Still, there is a good amount of ground to be covered to ensure sustainability and consistency in its growth. We will certainly be -- we are already charging for this product at the rate of INR 500 per crore, which is probably lower than what market changes. We will at the appropriate time, as I mentioned in my speech, consider appropriate charges in respect of Equity Derivatives once a feeling of sustained growth is achieved by us.

[Narendra Shah, analyst]

Yes. We all can see the commendable growth that we have been doing in The Derivatives, and you actually answered my question that, are we going to increase that charges. So we do it once there's a respectable time for that, right?

[Sundararaman Ramamurthy, executive]

Sorry, I didn't hear your question properly?

[Narendra Shah, analyst]

So regarding the transaction charges that -- we are planning to raise it at some point of time, right?

[Sundararaman Ramamurthy, executive]

That's exactly what I told in my speech, and I also repeat it. At an appropriate time, we will consider charging -- levying appropriate charges in respect of Equity Derivatives segment. Yes.

[Unknown Analyst]

And my second question regarding the Equity Cash segment. So what are we doing on that front to capture more market share? Anything that you would like to share?

[Sundararaman Ramamurthy, executive]

Sure. So on the initial first part, we, of course, changed the tick size, which you all are aware of up to INR 100. That gave us some amount of benefit in increasing the market share of those securities from 9% to 12%. So it's a significant growth. But that's not the beginning and end of it. You need to move into other areas. One area where we really do well is blocks, and we continue to do well, and we continue to engage with our stakeholders, informing them of the benefits of block trades, and we see good traction there.The other area is that the institutional volumes are --So what we feel is the institutions are not at this point of time, particularly FPIs, fully facilitated to trade in multiple exchanges post interoperability. If FPI trades in BSE and NSE for the same script for the same order, he does not get a single contract note with a VWAP price of what he has traded in both the exchanges from the broker. This puts his back office into a [ tussle ]. So we had studied this in great detail. We are in engagement with the market participants to enable FPIs to participate in multiple exchanges, which we see will [ fructify ] appropriately, and that would be the next stage for growth in Equity Cash segment.

[Operator]

Next question is from an [indiscernible], an individual investor.

[Unknown Analyst]

Sir, I have 2 small questions. One is, if I want to understand the transaction charges which we are charging for Equity Derivatives. We are charging INR 500 per crore of notional turnover. So does that mean…

[Sundararaman Ramamurthy, executive]

Sorry, May I interrupt you? It is INR 500 per crore of not notional, it's of premium.

[Unknown Analyst]

Yes. So if I want to understand that, on last Friday, the turnover was about INR 145 lakh crores. So how much of that will go to the top line? If you can please help us understand?

[Sundararaman Ramamurthy, executive]

So the numbers are a bit wrong. Sorry for the interruption. The numbers are wrong. It is INR 44 lakh crores. Wrong number. It was some INR 44.2 crores or something. INR 44 lakh crores was the notional. The premium is not a direct function of the notional. The premium is a function of volatility and many other things. So it will not be just right to compare with the notional. Though every one of us understand notional. The premium is charged -- the transaction charges are on premium and premium does not have a direct proportional relationship with notional.

[Unknown Analyst]

The other question I have is on the buyback. You have announced that -- the price of INR 816 per share. But now that the share price has moved up significantly, are we thinking about it, to revise the price or something?

[Sundararaman Ramamurthy, executive]

It's a very interesting and good question that you're asking. In the speech when I was telling, actually, we told you -- I explained as to how this INR 816 was arrived at. Based on the specified date on which we fixed this, it was around 34% premium over the closing price of June 30, 2023. So INR 816 was fixed by following the practices and requirements as stipulated with the premium, which we thought was substantial. We do not have any control over the market movement. Subsequently, the markets could move anywhere. So at this point of time, the buyback price is INR 816.

[Operator]

Next question is from the line of Pranav Thakkar, individual investor.

[Pranav Thakkar, analyst]

Sir, my question is with reference to derivative. If you can share what was the revenue last Fantastic Friday, that is when we record highest derivative turnover? And my second question was in the similar line of derivatives that, as a segment, do we have to incur separate additional cost? Or I would like to understand what would be the cost structure of derivatives?

[Sundararaman Ramamurthy, executive]

So the answer to the first point is, the revenue earned on that day was only INR 26.6 lakhs because it is on premium. The total premium traded on that day was INR 5,320 crores. Therefore, that is the revenue. On the cost structure, at this point of time, we are using the existing infrastructure to fuel these volumes. But as I told as the market is growing, there will be need for colocation space, provision of racks, provision of connectivities, provision of connecting system, peripheral system, main system, back-end systems and all.So certainly, there will be some amount of capital expenditure. Based on how the market grows, the capital expenditure would vary, as you would appreciate. When capital expenditure increases, depreciation and operational expenditures will also increase. So we also -- That would happen if the volumes go upward. Therefore, the revenue will also grow. At some point of time, the revenue growth will be overtaking the cost, resulting in a profit margin. That is the entire logic behind pushing this product.

[Operator]

Next question is from the line of Raja Panda, individual investor.

[Raja Panda, analyst]

Some of the authorized persons who are in my circle, they have reported that now BSE is going to charge an AMC of INR 4,000. This authorized person is sub broker. So could you please confirm if this is correct? And if it is, then what is the number of authorized persons on your system?

[Sundararaman Ramamurthy, executive]

Indeed, there is going to be some charges for authorized persons. I wouldn't exactly remember the number of authorized persons or what is exactly the charge. If you can e-mail to our people, we will be able to give you that data. That's not an issue, because the charges are public domain in any case. The number of APs I wouldn't remember off hand.

[Operator]

Next question is from the line of Devesh Agarwal from IIFL Securities.

[Devesh Agarwal, analyst]

Firstly, congratulations on a successful deal on the open Sensex Equity Derivative product. My first question is around the same thing. In your opening remarks, you did mention that the number of UCCs have seen a significant increase, as well as the number of members. So if you could share some more insights in terms of [Technical Difficulty] that you have [ given ] to achieve this, that will help us to better appreciate the entire efforts of BSE?

[Sundararaman Ramamurthy, executive]

Sure. Certainly. As I was mentioning, the day when we started, we had very few members, just 28 members participating. Only very few front-end trading systems were supporting BSE Equity Derivatives. A product has to be broad-based, liked by all and traded by all, then only it sustains. Since we had gone and met a couple of hundreds of brokers, taken their views, taken the views of their clients, taken the views of their dealers before relaunching this product, though we started with just 28 people, with our relentless efforts of showcasing this product, more and more members started flocking in. Once the members come in, the input to the software providers requesting for the capability to trade -- the front end capability to trade BSE derivatives started increasing, and therefore, software vendors, almost all of them now are providing the front-end capability to trade into BSE's F&O system.This has helped in big, large retail brokers to introduce our product in their platform. People who are delaying because of the software requirements and changes that they are making, started getting more and more calls from the investment -- investing public as to when Sensex derivatives are going to be made available, putting in a way a mild sort of friendly pressure on the brokers to introduce it [ ASAP ] in their system.This is the reason behind the significant growth from very few UCCs from first day to significantly large number of UCCs at this point of time. But as I said, this is just the beginning. There is a long way to go. We have to continue to work hard, continue to work with our brokers, more and more understand the requirements and take things forward. But we are confident with the continued effort and concentration and attention and focus that me and my team are having, we will be able to achieve it.

[Devesh Agarwal, analyst]

And sir, just to understand, what would be the usage if those would be active on NSE?

[Sundararaman Ramamurthy, executive]

Honestly, I would not be the right person to comment on it.

[Devesh Agarwal, analyst]

No issue, sir. Just to understand, would now -- all the large retail brokers and the software vendors that you are mentioning, are they offering the Sensex product or you are expecting more to come in which can further drive the volume? Any big broker or software vendor which could actually add to the overall units?

[Sundararaman Ramamurthy, executive]

So most of the software vendors, as I told you, are already providing access to Equity Derivatives. All the big brokers -- many of the big brokers are in -- many of the other big brokers are in the process of getting in because overnight change are not possible on software issues. While the software vendor might have provided, acclimatizing it and dovetailing it with the back office all are very important. Also, if you look at it, many of the big brokers, they also have their own software. So their own software will be much more, what should I say, customized for that requirement. In such a situation, making changes in them take some amount of time. So they are in the process. As I was mentioning, today or last Friday, 219 brokers traded on Sensex options. The numbers increase every Friday. We expect the numbers to grow further as more and more people are coming in.

[Devesh Agarwal, analyst]

And sir, if we compare the option premium to notional number for us and the competition, we will be 1/3 of what they achieved. So we will be around 7 basis points and they are around 22. I would believe this is partly because most of our volumes is happening around the expiry day. So any thoughts around that? What are we planning to do about it?

[Sundararaman Ramamurthy, executive]

So see, first of all, between different products we should not compare. That is one point. Second point is, premium is a function of the following: strike price; spot price; time of expiry; volatility and rate of interest, especially rate of interest. Just taking only one factor and presuming because of it the premium percentages are different, may or may not be correct. That is one part of it. Therefore -- and second part is, of course, they are different products. So that would be my reply to your question.

[Devesh Agarwal, analyst]

And finally, sir, last question from my side. Any target in terms of market share that you have to achieve on Equity Derivative segment?

[Sundararaman Ramamurthy, executive]

As I told you, we are not considering ourselves as a competing product to compare the market share. We are always considering ourselves as complementary products. Today I find in media lot of people on my expiry day talking about how they are using Nifty and Sensex together for giving form to their aspirations and views. So we feel that we are complementary products. We feel, therefore, our growth should come from within instead of looking at outside and putting across a market share on our end.And also, we are talking about different products, similar but different products. So strictly speaking, trying to put the market share target, in my opinion, is not very meaningful.

[Operator]

Next question is from Rajesh Gajra from Informist.

[Rajesh Gajra, analyst]

So basically, from the presentation I just wanted a few numbers, if you could share. One was your listing fee income number for the previous quarter, that is Q4 of FY '23. Listing fee, book building and other services and your mutual fund revenue. So these 3 for the previous quarter, that is Q4 of FY'23?

[Unknown Executive]

So Q4 of '22 – Q4 of '23 – FY '23, that is March -- quarter ending March 2023, our listing fees were INR 61 crores. Book building fee was INR 14 crores and mutual fund income was INR 24 crores.

[Operator]

Next question is from the line of Prayesh Jain from Motilal Oswal.

[Prayesh Jain, analyst]

Just continuing on the derivatives. This has been pathbreaking for BSE in terms of volume ramp-up that we've seen. One question, you mentioned that you will do it at an appropriate time, the increase in transaction charges. So what is there in your mind? When you say appropriate time, is it a volume reach or is it a market reach? Because from a price point, do you think that a change in price to the competitive levels would really kind of impact our volumes in that sense and that's the apprehension of not increasing the prices right now?

[Sundararaman Ramamurthy, executive]

So let me start from the bottom. It's not any apprehension or anything which is making us to think about an appropriate time. It's about the product [ sustenance ] and the people walking in and getting the benefit of a new product, which has come as a complementary product to support and de-risk the market from concentration risk. So that is the idea.Would I be able to tell what the appropriate time is? If I could, honestly, I would have told already, this is the time by which we will introduce. Do I have a parameter which is [ single ] to tell that this is the appropriate parameter, appropriate thing, is it in terms of volumes or in terms of values or in terms of participation? The honest answer is, I do not know.I wanted to --s see, it's a question of -- see, the markets are very difficult to predict. As and when it develops, I'm sure you will appreciate. When you look at it at some point of time, you will see that things have come to a steady state. What the steady state is, it could be different for different products in different circumstances. So once we get internally a feeling of a steady state of this product, that will be the appropriate time.

[Prayesh Jain, analyst]

And other -- more on that, could you share some insight into what is the kind of concentration with respect to the volumes on derivatives today with regards to numbers or with regards to customers? Anything on that, that can help us understand also the kind of concentration level?

[Sundararaman Ramamurthy, executive]

Sure. We can. Honestly, today, with the 212 members participating, the concentration is not derivatives. It is very well spread. If we talk about at least a participation of 20 members, 30 members, there is typically a big concentration. Fortunately, for us, thanks to all people, including Motilal Oswal and others who participate in the market, in our products, it has been wonderfully nicely spread. We have good participation from retail, good participation from proprietary traders, good participation from dealer networks, good participation from mobile trading people and good participation from HFT.When I look at it, I find it as a healthy mix of all the types of participants who typically you find in a mature product trading. That's what I'll be able to share with you.

[Prayesh Jain, analyst]

With respect to colocation and other CapEx that you mentioned for the Derivative segment. First of all, what kind of volume levels would you wait for before you kind of start committing towards that number? And secondly, as you've mentioned earlier, I think for the colocation for the Cash segment, you've already kind of started charging the members. Would similar mechanism be implemented and hence, no major impact because of the higher operational costs?

[Sundararaman Ramamurthy, executive]

No. See, here, one important point to be noted. Today, we are charging in colocation only to cover our cost. It's not like the market model where colocation appears to be a profit center. For us, it is no longer a profit -- it's not yet a profit center. It's just no cost -- no profit stages at this point of time. So it is not the cost charging to colocation for Derivatives or Cash segment. Because colocation is colocation people who put the servers, may use it for cash or may use it for derivatives.And other CapEx planning will not be dependent on volume. As I told you, we already crossed 50 crores orders last Friday, right? So it's not orders which would be making us to decide on when and how much we have to spend on CapEx. The question of how much of the requirement that comes from the members for the racks. As you know, BSE has unique services in terms of full racks, quarter racks and half racks. Quarter rack is not a thing which I think anybody else is providing, only we provide I think. I may be right, may be wrong. You may like to check. So these services we are providing. So we have stocks very limited. We are exhausting it.If we find the queue is beyond a number, then we have to necessarily invest in colo and provide to address those queues. In our opinion, the way the queue is building, we need to therefore invest in CapEx in the near future. CapEx to materialize into physical assets has a gestation period. So we have to be mindful of the gestation period. We start investing in advance and there will be therefore some existing queue and some projected queue, so based on which is what we will start incurring the CapEx. It's not the volume that will drive, it will be demand for colo that will drive. At this point of time, colo is not a profit center. That doesn't mean -- at some point of time, colo will also be giving some amount of profit.

[Prayesh Jain, analyst]

Last question from my side. There is still a liquidity enhancement trend that we've seen in this quarter. What is that pertaining to? And how do we see it going ahead?

[Sundararaman Ramamurthy, executive]

The liquidity enhancement scheme amount you're seeing is not for BSE Limited. It is for India INX, which is our Gift City exchange.

[Prayesh Jain, analyst]

That will continue, right?

[Sundararaman Ramamurthy, executive]

Pardon me?

[Prayesh Jain, analyst]

That will continue?

[Sundararaman Ramamurthy, executive]

Yes, that is -- That will be continuing the way where -- that depends on what the developments are there, accordingly we'll continue.

[Operator]

[Operator Instructions] Next follow up is from the line of [indiscernible], individual investor.

[Unknown Analyst]

Sir, I wanted to ask you about the kind of cash which is sitting on our balance sheet. What is the management thinking about it? And what is the way forward there?

[Sundararaman Ramamurthy, executive]

So buyback is one such effort to take care of that.

[Unknown Analyst]

But sir, if I may add, buyback is possibly linked to the CDSL sale which we have sold. But we do have significant cash sitting on the balance sheet. Is there any thought in that direction?

[Sundararaman Ramamurthy, executive]

So as I was just narrating to you, since the Equity Derivatives segment is taking off -- First of all, CDSL sale is equal to buyback is probably not a correct equation. CDSL sale augments the cash reserves, so buyback. That's the way probably I would like to look at it. The question remains very valid. We have a significant cash reserve. What are you planning to do is a very valid question. As I told you, it is for the first time BSE is seeing some activity in Equity Derivatives, thanks to the support from market.So when we expand, there is quite an amount of expenditure in terms of technology, which I talked about now, in terms of front-end system, peripheral system, connecting system, main system, back-end system, the connections to the clearing corporation, reporting system, et cetera. So clearly, there will be some amount of fruitful CapEx associated with -- therefore, the depreciation around it and the OpEx where these [ monies ] will go in.

[Unknown Analyst]

Sir, if I may just squeeze in one more question. This is regarding the Hindustan Power Exchange. Can you provide any update on, is the management happy with the kind of response it is getting, or anything on that, sir?

[Sundararaman Ramamurthy, executive]

On Hindustan Power Exchange, it has reported profit in Q1, and the volumes in power sector are high in the Q1 and Q4 and dips in Q2 and Q3. We have infused a capital of around INR 1,250 crores.

[Unknown Executive]

No, [ INR 12.5 crores ].

[Sundararaman Ramamurthy, executive]

Sorry, [ INR 1,250 lakhs ] -- sorry. I'm sorry. So INR 12.5 crores basically. So I think the market share in June '23 for contingency and energy trading [ Subsidy K ] is around [ 32.23% ] and [ 32.75% ]. I think things are moving in this direction as far as SPX is concerned. It's an associate company with equity stake of 22.62% in this case.

[Unknown Analyst]

I have been an investor for 5 years, and I must congratulate the team. Especially once you have joined, we have seen the exchange moving in the right direction. And hopefully, it is a good day for all of us.

[Sundararaman Ramamurthy, executive]

Thank you for all the support that you all are providing to us.

[Operator]

Ladies and gentlemen, we'll take the last 2 questions. Next question is from the line of Pranav Thakkar, individual investor.

[Pranav Thakkar, analyst]

Sir, actually, I don't have any questions, but there is a suggestion that, why don't you split expiry of Bankex and Sensex? Because if we have Fantastic Friday, let us have Monday Magic or something like that. On a different note, because most of the volumes are happening on expiry day, and I myself, I am also a trader. So based on that, I can make it out that it will come to grow further. So do we have any plans on this?

[Sundararaman Ramamurthy, executive]

What would be your suggestion? Should we have it on Monday or Tuesday or Wednesday or Thursday?

[Unknown Analyst]

No, sir, Monday -- Look, NSE is having Tuesday as financial Nifty expiry. They shifted BANK NIFTY expiry on Wednesday. Thursday is Nifty expiry. So only slot which is available to us is Monday, okay? So I believe NSE is splitting all this to have volume benefit and extra turnover, and Monday is the only day which is now available. So if Monday is available, then we also have benefit of added revenue growth?

[Sundararaman Ramamurthy, executive]

Monday mid-cap expiry is there I am told.

[Unknown Analyst]

No. It is Wednesday, I don't know if they have shifted to Monday.

[Sundararaman Ramamurthy, executive]

But they are shifting. They are shifting.

[Unknown Analyst]

But there is not much of the volume. It would be -- the volume would be similar to what Bankex is having right now. There is not much volume. And so, it will be at par with NSE and we also have equal opportunity for growth. So we have only 1 day. If we consider 5 trading days, we have only 1 day. Let us have 2 days in a week. So if we can do that, please.

[Sundararaman Ramamurthy, executive]

Thank you for the suggestion. We will take market feedback, and we will react on it.

[Operator]

Next question is from the line of Rajesh [indiscernible], individual investor.

[Unknown Analyst]

My question is almost same, as some people asked already on buyback of shares. I can see that as of date, this seems to be [ cutile ] of a [ size ],, will go nowhere with the kind of movement in the share price. So I'm certain that management must have already been thinking about what course of action is available to them, either by increasing the buyback price or some other means to return money to investors. So if you can throw some light on that, I'll be grateful.

[Sundararaman Ramamurthy, executive]

The job of management would be to enhance shareholder's value. If that is possible through buyback, that is what we will do. If we get through any other mechanism, that is what the management will strive hard to achieve. The buyback process is well-defined regulatorily and statutorily. There are steps stipulated in the journey of buyback. We have just entered into that process by announcing the buyback with the price, with the hefty premium also as on a specific date, which we observed, and based on professional advice. Market movements are not predictable and market movements would always take the course of action to different places depending on its own course.The buyback mechanisms provide for all such eventualities because it's a time-tested regulatory mechanisms.

[Operator]

Rajesh, do you have any follow-up questions?

[Unknown Analyst]

No. I think we are just shying away from saying what our thinking is, but I can understand that.

[Sundararaman Ramamurthy, executive]

Honestly, we are not shying away. It's your opinion that the buybacks will [ fail ]. That is your opinion. So I will not be the right person to comment on your opinion. So what I have stated is absolute fact that INR 816 was 34% premium over June 30, 2023's price, and buyback follows a process. That is the process which we are following. When we are offering for buyback, where is the shying away. It is coming forward and offering. And honestly, every action is towards the enhancement of shareholder value.

[Unknown Analyst]

Sir, I have no doubt in that you are enhancing the shareholders' value, and you are taking the right steps. But as of date, it seems -- like if you tell us we may spend money, which may go waste, nobody is going to offer you -- I mean, practically, if you look at it, nobody is going to offer you shares at INR 816 when the price has already moved up significantly.

[Sundararaman Ramamurthy, executive]

I see your point, and I -- we much note what you are saying.

[Operator]

Ladies and gentlemen, for further queries you may write your questions on [e-mail]. [Technical Difficulty] I now hand the conference over to Mr. Anand Sethuraman for closing comments.

[Anand Sethuraman, executive]

Thank you everyone, for joining us today. Should we have any further questions, like Nirav said, please feel free to reach us to at [e-mail]. Thank you so much. Good night.

[Operator]

Thank you very much. On behalf of BSE Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.