Subscribe to MCX IPO: Emkay

Emkay Global Financial Services has come out with its report on Multi Commodity Exchange of India Ltd (MCX) IPO.

MCX is a dominant player with 88% market share in the Indian commodities market. It enjoys virtual leadership in silver, gold, copper, natural gas and crude oil globally. Product innovation with strong infrastructure - key to sustainable growth. Approval towards Options trading and opening windows for FII/DII and banks to propel volumes. Impressive traded value at 47% CAGR translated into 32% revenue CAGR and 51% APAT over FY09-FY11. EBIDTA margins at 60%+ (9MFY12) due to higher operating leverage. Scalable model, ability to generate sustainable free cash flows, healthy return ratios and reasonable valuations provide room for decent upside. MCX is a market leader in the commodity exchange business with 87.5% market share and significant presence across key commodities like gold, silver, copper, crude oil, etc, which gives it competitive edge in a rapidly growing market. Robust technological infrastructure and trading platform, varied product offering, strong alliances, growing market presence and healthy operational performance has enabled MCX to clock 38% CAGR in traded volumes to 213 mn contracts and subsequently, 37% CAGR in transaction fees to Rs 3.5bn and 32% CAGR in revenues to Rs 3.7bn over FY09-FY11. Going forward, continued presence in key global commodities, product innovation, relaxed norms towards options trading and inclusion of FII/DII and Banks to commodity trading would ensure sustained domination of MCX. We are enthused by MCX

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