Motilal Oswal is bullish on MCX has recommended buy rating on the stock with a target price of Rs 1510 in its research report dated June 01, 2020.
Motilal Oswal 's research report on MCX
Despite weak volumes over the last week of 4QFY20, MCX has reported strong revenue growth (+33% YoY). Adjusted for one-off expenses, EBIT margin was largely in line with our estimates. Normalization of market hours translated into incipient signs of recovery in traded value for May’20, largely led by gold (+69% YoY) and silver (+121% YoY). - Cues from the GFC period hint at increased interest in precious metals over a 2-3 year period following any crisis or market volatility. The COVID-19 led slowdown in global growth, soft interest rates and liquidity injections should be the key factors driving interest in gold/silver this time. Normalization of margin requirements in the crude segment is likely to drive continued volume growth.
We upgrade our EPS estimates over FY21-22E by 3-6% as we adjust our EBITDA margin trajectory. We continue to like MCX for its near monopoly in the commodity exchanges’ segment in India. Over the course of its listed history, one-year forward P/E multiples averaged ~25x. Our target price implies 25x FY22E EPS. Reiterate Buy.
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