Multi Commodity Exchange (MCX) share price touched an intraday high of Rs 5,707.7 per share on the NSE in September 17 trade, up over 2 percent after analysts at domestic brokerage Motilal Oswal tagged 'BUY' rating on the MCX shares seeing a high upside potential.
Motilal Oswal in its latest report said after the MCX transition to Tata Consultancy Services (TCS) starting October, there will be a marked improvement in its profitability and the management will focus on scaling up the business.
TCS will help MCX build a new technology core, transforming its trading as well as post-trade functions, to support its future growth and further strengthen its leadership position in the commodity derivatives market in India.
The brokerage in its report said "From 1st Oct’24, MCX will start paying the AMC to TCS, which will be fixed in nature, causing no volatility like the previous quarters. MCX has not charged any penalty to TCS so far."
MCX share price target 2024
Motilal Oswal has tagged a 'BUY' call on the counter, recommending a share price target of Rs 6,500 per share, an upside potential of nearly 15 percent from Tuesday's level.
It is bullish on the counter seeing a re-rating potential. "With the technology overhang behind MCX and near-term potential drivers in place, we see meaningful re-rating potential," it noted.
The analysts are bullish since MCX plans to grow volumes by launching new products, such as serial contracts, index options, 10g monthly gold futures, cotton seed wash oil, crude sunflower oil contracts and many more in the pipeline.
"After future volumes on these products exceed the volume threshold of INR10b, MCX will launch options contracts," the report said.
MCX is also preparing to introduce weekly contracts, which are currently undergoing extensive back-testing prior to the submission to SEBI for approval.
"For MCX, retail participation has increased to ~0.9m participants. Retail participation can strengthen further with new product launches, a change in the transaction rate structure while FPIs are showing good traction. MCX currently has around 100 FPIs actively trading on its platform," it said.
The stock has been gaining for the last three days and has risen 7.25 percent in the period. At the time of publishing, the stock was trading at Rs 5,650.05 per share on the NSE, up 1.03 percent.
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