ICICI Securities research report on Multi Commodity Exchange of India
MCX’s Q2FY25 results exhibit three main trends: 1) consolidating on the new steady cost profile; 2) Healthy volumes across futures, options and premium conversions. 3) Growth in option participation. We indicated upside risk to earnings from volume surges, basis commodity volatility in our previous note (link), and it played out on these lines in Q1/Q2FY25. To adequately capture this higher-thanexpected volume growth potential on earnings, we now roll over to FY27. However, we believe our FY26/27E PAT of ~INR 7.3/8.8bn captures reasonable volume growth outlook well. Maintain HOLD. Upside risk may arise if commodity option trading continues to receive traction akin to equity, whereas downside risk may stem from reduced volatility-driven dip in volumes. Refer Exhibits 2 and 3 for scenario analysis of earnings to volume drivers.
Outlook
Basis our revised target price of INR 6,670, MCX is trading at 45.2x FY26E P/E and 49.6x FY26E core P/E (ex-other income).
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