Hold Multi Commodity Exchange of India; target of Rs 1430: ICICI Securities

ICICI Securities research report on Multi Commodity Exchange of India

Multi Commodity Exchange (MCX)’s extension of services of its existing software vendor poses a challenge to our FY24 earnings expectations considering the impact is pegged at Rs3.5bn compared to normal annual software cost of Rs550- 600mn pre FY23. However, there has been a strong silver lining in rising options volumes which were at Rs745bn ADTV levels in Jun’23 vs Rs340bn in FY23. These contrasting extremes make us cut valuation multiples on account of weak execution in terms of software platform transition but earnings upgrade in FY25 due to higher options volumes assuming the complete transition happens by FY24 end. The ultimate event of transition is still pending, and hence, is an overhang. Maintain HOLD.

Outlook

Maintain HOLD with target price of Rs1,430 (earlier Rs1,412 based on 20x (earlier: 25x) FY25E adjusted core EPS of Rs65.5 plus free cash of Rs120per share).

For all recommendations report, click here