Switzerland-based brokerage UBS reaffirmed its 'buy' rating on commodity exchange player Multi Commodity Exchange of India Ltd (MCX), amid favourable market dynamics and new product launches.
At 11.15 a.m., shares of MCX rallied over 5.6 percent to Rs 8,675, hitting a fresh all-time high on the NSE.
The broking house also hiked its target price on the stock to Rs 10,000, up from Rs 7,000 earlier, which indicates an upside of 22 percent from current levels. Over the past one year, MCX shares have rallied over 100 percent, more than doubling investors' capital.
Further, MCX's trading volume has been robust since April, with futures' average daily value (ADV) up around 50 percent QoQ and option premiums' ADV up around 30 percent QoQ.
"We expect key commodities' ADV to remain strong amid volatility caused by geopolitical uncertainties. New products such as electricity derivatives, monthly bullion contracts and index options (in the pipeline) may further support near- to medium-term growth," said UBS.
Considering this, the brokerage raises its EPS estimates for FY27-28 by 13-17 percent, and expects a 26 percent earnings CAGR for FY26-28 based on operating leverage.
"We are meaningfully ahead of consensus and believe expectations may increase by 15-20 percent, similar to last year. MCX is trading at around 42x FY27E PE; we believe the market is not fully pricing in new products' growth potential and operating leverage benefitting from higher volume," it added.
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Commenting on the new launch of electricity derivatives and monthly silver options, UBS said, "Our initial analysis indicates a potential revenue contribution of 3-12 percent from electricity derivatives. Despite the limited available details, we conservatively assume electricity derivatives may contribute about 3 percent of revenue in FY28, with upside potential."
On new silver options, the Swiss broking firm expects good traction given the preference for near-to-expiry contracts. For context, after the launch of monthly gold options in November 2024, the premium ADV grew from Rs 100-200 crore to Rs 400-600 crore, partly supported by volatility and monthly contracts accounted for 80-95 percent of gold premium ADVs.
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