Buy Multi Commodity Exchange; target of Rs 1470: ICICI Direct

ICICI Direct's research report on Multi Commodity Exchange

MCX is the leader in commodity derivatives exchanges in India with ~94% market share in terms of value of commodity futures contracts traded in FY20. The commodity derivatives exchange facilitates nationwide online trading, clearing and settlement operations of commodities derivatives. MCX is practically sole exchange with 98.57% share in precious metals, ~99.95% share in energy and ~100% share in base metals. Indian commodity market still remains underpenetrated. Hence, it is seeing a steady rise in turnover from Rs 62 lakh crore in FY15 to Rs 89 lakh crore in FY20. Sebi has been undertaking measures to increase participation. MCX remains one of the primary beneficiaries given its substantial market share.

Outlook

MCX trades at 26x FY22E EPS. We have a BUY recommendation on the stock with a target price of Rs 1470, valuing the stock at ~33x FY22E core earnings and adding net cash after deducting SGF.

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