MCX can move to Rs 1250, says SP Tulsian

SP Tulsian, sptulsian.com feels that Multi Commodity Exchange of India (MCX) can move to Rs 1,250 in about six months.

Tulsian told CNBC-TV18, "MCX has corrected quite a lot, a month back it was ruling at Rs 1,300 and now ruling at sub-Rs 1,000. The main reason for that has been firstly the fear of imposing commodity transaction tax (CTT), which has come in this Budget but on the non-agriculture products.”
He further added, “Going by the same trend, the stock seems to have seen much more correction than what it deserves. From Rs 1,300 to sub-Rs 1,000, I do not think it justifies that kind of a correction because the CTT seems to have got absorbed by the market.”
“They have a commodity exchange which enjoys 85 percent of the market share plus presence in about 1,600 cities with 3.5 lakh terminals and 2,200 members. If I go by their operational performance for first nine months, they had a topline of close to Rs 400 crore with profit after tax (PAT) of Rs 222 crore translating into an earnings per share (EPS) of close to about Rs 44 for nine months.”
“If you see, in FY12, the company had an EPS of Rs 56. So, probably the same kind of EPS is likely to get posted by the company for FY13 also maybe about Rs 57-58. However, going forward for FY14, one can expect an EPS of closer to Rs 65-66 because FY13 seemed to be more a flat year for the company.”
“Shareholding pattern is quite robust, 26 percent is held by the promoter i.e. Financial Technology, which is also a listed stock and 59 percent is held by the overseas investors, institutional investors. So, in all 85 percent float is with the promoter and the institutional investor.”
“Going by the trend and the trading pattern, we see the stock swiftly moving back to the old levels. In the past also, looking at the chart patterns, the stock corrects by about Rs 200-250 and bounces back maybe in very quick time. So, taking that into account, I expect that stock can move to Rs 1,250 though the longer time horizon is, as set by me, of about six months and the downside seems to be very limited or virtually very low from hereon.” Disclosure: I have no holdings or interest in the stock discussed.