Exchanges, Staffing and Internet (Q4FY26E Results Preview): Exchanges Hitting New Peaks

MCX is expected to report a robust quarter, led by strong growth in options trading, driven by energy contracts. Options revenue is estimated to rise by 49.6% QoQ while futures revenue is expected to expand by 6.8% QoQ, taking total revenue to INR 8.87bn in Q4, up 33.3/204.5% QoQ/YoY. We expect EBITDA/PAT of INR 6.81bn/5.47bn, up +37.6/+36.3% QoQ. Options notional ADTV was down 13.6% QoQ to INR 5,654bn while premium ADTV jumped to INR 106.2bn (+49.6% QoQ), led by higher P/N ratio. For the quarter, the P/N ratio for the quarter stood at 1.85% vs 1.07% in Q3, led by higher volatility across all commodities. The options premium ADTV exit in Mar-25 was INR 124.27bn; however, we take a conservative estimate of INR 83.40bn for Q1FY27, which is ~33% lower than March. MCX is seeing continuous increase in volumes leading to earnings upgrade. MCX remains our preferred pick among exchanges; we maintain BUY with a TP of INR 3,230, based on 43x FY28E core EPS plus net cash ex-SGF and margin.

BSE is expected to post a strong revenue growth, driven by higher options revenue, partly offset by softer cash and decline in IPO revenue. Margins are set to improve, owing to robust growth and lower clearing costs as premium realization inched up in the quarter. Options premium stood at INR 289bn, up 49/145% QoQ/YoY, driving transaction revenue. Total revenue is likely at INR 15.74bn (+26.5/86.0% QoQ/YoY), with derivatives contributing INR 11.28bn (~72% of total). EBITDA margin should improve to 68% vs 62.5% QoQ. SGF outgo is expected to be at INR 0.63bn, ~6% of derivatives revenue (similar to last quarter). APAT is estimated at INR 7.57bn vs INR 6.02bn QoQ. The regulatory concerns around weekly options are now behind and BSE has been gaining market share. We estimate options premium of INR 291bn for Q1, which is ~30% below vs the April run-rate. BSE is witnessing continuous earnings upgrades. We maintain ADD with a TP of INR 3,800, valuing the core business at 40x FY28E PAT.

CDSL is expected to deliver a weak quarter, led by a drop in IPO revenue while the annuity, KYC and transaction revenue will be stable. The depository added 7.4mn demat accounts in Q4 vs 7.6mn in Q3, with a market share of 80.2% (+73bps YoY) and an incremental share of 86%. Revenue is expected to decline 4.2% QoQ, while it would be up 30% YoY. The EBITDA margin will be down 367bps QoQ to 49.2% due to investments in technology. Annual Issuer /Transaction/IPO/KYC revenue is expected to rise 2/3/-54/5% QoQ, respectively. The revenue growth moderated to 8.5% in FY26E, which we expect will increase to ~18% in FY27E. The improvement is based on higher annuity revenue and expected recovery in transaction and KYC revenue. We maintain ADD on CDSL with a TP of INR 1,400, valuing the stock at 42x FY28E EPS (vs 45x earlier).

Staffing: Teamlease is likely to see a drop in net associates while margins will remain stable. General staffing associates will continue to decline while DA will witness growth. Specialized staffing growth will be supported by GCC demand. Revenue for the quarter is estimated at INR 29.55bn, down 1.9% QoQ, with consolidated margin at 1.6% (+16bps QoQ), driven by HR services, while core and specialized staffing margins remain steady. We downgrade the staffing sector, both Teamlease and Quess to ADD from BUY, based on growth slowdown, labour laws uncertainty, and margin recovery concerns. Teamlease TP now stands at INR 1,500, based on 14x FY28E EPS. Quess is expected to post a soft quarter, impacted by labour laws and war-related uncertainty, with 1.4% QoQ revenue growth and 2.1% EBITDA margin. We have an ADD rating for Quess with a TP of INR 233, valuing it at 13x FY28E EPS (trades at 12x FY27E).

Internet

• IndiaMartis set for a soft quarter with muted net supplier additions (-500 in Q4) due to a recent price hike and no change in monthly churn. ARPU expansion persists, driven by package upgrades and the price increase. While ARPU growth has powered performance across recent quarters, higher-than-anticipated churn is curbing volume expansion. Collections should achieve low double-digit growth in Q4 (INR 6.01bn +11% YoY), still way behind the 5Y average of ~20%. We forecast Q4 revenue growth of 2.2% QoQ and 16% YoY, fuelled by ARPU (+1.8/10% QoQ/YoY). EBITDA margin is projected at 30.6% (-285/-616 bps QoQ/YoY), led by payout of incentives. Margins should hold at ~32-35% during moderate growth phases and dip to 28-30% when growth accelerates. Management lacks clarity on the churn improvement timeline, though the worst seems behind. We project revenue/EPS CAGRs of +14%/16% over FY26-28E and maintain BUY with a DCF-based target price of INR 2,650 (26x FY28E EPS).
• Info Edge: Info Edge’s core recruitment billing growth slowed down in Q4 to 9.5% YoY, due to a slowdown in IT sector and war-related uncertainty. The billings growth for FY26 stood at 10% vs 14.6% in FY25. The IT sector remains slow, with GCC clocking strong growth. Other sectors like BFSI and Manufacturing are witnessing low double-digit growth. Standalone revenue should rise 3.7% QoQ, with EBITDA at 40.5%. Jeevansathi is witnessing growth and reaching close to breakeven while 99acres continues to struggle on growth front and will report a loss. Recruitment margin will be at 59% (-33 bps QoQ) due to slower billings growth, supported by lower advertising spend. Recruitment margins will be >60% only when billing growth exceeds 15% YoY. We forecast revenue CAGRs of 11/14/22/10% for Naukri/99acres/Jeevansathi/Shiksha, alongside a 12% standalone EBITDA CAGR over FY25-28E. We maintain BUY on Info Edge with an SoTP-based target price of INR 1,275, applying 25x EV/EBITDA (vs 30x earlier) to recruitment and 3x/3x/2x P/S to 99acres/Jeevansathi/investments. Zomato and Policybazaar add INR 425/119 (~33/9% of SoTP).
• Route Mobile will have a stable quarter, with focus on profitability (EBITDA up 16.8% YoY). Domestic volumes will remain stable while international remains soft. With ~50% of revenue from international markets, post-integration volume drops and cost spikes are now being addressed. Telesign and BICS synergies are taking time to materialize. CPaaS sector revenue growth has decelerated amid telco pricing pressures, but we anticipate domestic messaging price hikes to aid recovery. Strong volume growth from OTT and RCS channels will persist. We project 1.0% QoQ revenue growth, 12.7% EBITDA margin, and PAT of INR 0.94bn this quarter. We trim revenue/EPS estimates by ~3/6%, yielding 6.2/6% CAGRs over FY26-28E. We retain ADD rating with a TP INR 740, based on 12x FY28E EPS.
• Tanla Platforms is expected to post a soft quarter with growth of 1.9/11.5% QoQ/YoY. The domestic messaging volume is stable while the OTT (WhatsApp) volume is back to growth path, absorbing the impact from the real money gaming industry. The enterprise segment is expected to deliver 2.0% QoQ and platform will clock ~1% QoQ growth. The platform revenue is expected to recover in FY27E, driven by the ATP deal and the MaaP platform (RCS). The gross margin will be at 27.5% and EBITDA will be at 16.6% (-43bps QoQ). We reduce FY27/28E EPS estimate by 3/9%, led by slow growth and lower margins on account of investments. We maintain BUY on Tanla despite challenges based on valuation comfort but reduce the multiple to 15x vs 16x earlier. We expect revenue/EPS CAGRs of 9/8.8% over FY26- 28E. We have a target price to INR 680, based on 15x FY28E EPS. The stock is trading at 12/11x FY27/28E EPS.