While analysts have cut their earnings estimates post quarterly results, many still find the stock valuations reasonable after a 21 per cent drop in the last one year, with their price targets on the stock suggesting up to 47 per cent potential upside.
Decline in future turnover is being replaced by strong traction in options, they said, adding that nonlinear growth in option volume may aid business and earnings growth.
On Monday, the scrip rose 5.45 per cent to hit a high of Rs 1,276.90.
“In the past one year, MCX has under-performed the market, as its volumes were under pressure due to implementation of the peak-margin rules. However, with the impact getting absorbed and volatility in commodity prices continuing, MCX volumes should increase going ahead. In base case, we estimate MCX EPS to clock 30 per cent CAGR over FY22-24, driven by options volumes. We value MCX at 35 times FY24 EPS, which is its long-term average,” said
.
The brokerage has a 12-month target of Rs 1,875 on the stock.
The company reported a 5 per cent YoY fall in net profit at Rs 36.50 crore for March quarter, impacted by one-off expense of Rs 20.60 crore related to intangible assets.
Revenue operating revenue grew 10 per cent YoY to Rs 106.5 crore. Other income was up Rs 14.6 crore, up 27 per cent YoY. Ebitda margin was at 56 per while PAT margin was at 30 per cent.
MCX enjoys 72 per cent market share in commodity futures traded in value terms. The exchange has 592 members, 43.49 lakh terminals and presence across 1,018 cities and towns as of March 31. Bullion trading accounted for 40 per cent of MCX’s total volumes in FY22; energy 36 per cent; metals 22 per cent and agri the rest two per cent.
said it remains positive on MCX on a gradual increase in average daily turnover (ADT) on the back of surging option volumes, amid rising volatility in commodity prices.
“Progress on other growth initiatives, such as a gold spot exchange and electricity futures face certain challenges. On the cost front, transition to
from 63 moons will drive savings and lead to a relatively strong (25 per cent) adjusted profit CAGR over FY22-24. We like MCX for its near-monopoly in the Indian Commodity Exchange segment. We value the stock at a multiple of 30 times FY24E EPS,” it said while suggesting a target of Rs 1,500 on the stock.
ICICIdirect finds the stock Rs 1,600 worthy. It said a significant increase in options turnover offset the decline in futures. Average daily futures turnover (ADTO) declined 17 per cent YoY to Rs 26,369 crore, due to decline in bullion volume, it said while noting that option ADTO continued to gain traction, rising 75 per cent sequentially to Rs 15,065 crore.
“Factoring in timelines for launch of spot exchanges,we lower our multiple to value MCX at 33 times core FY24E EPS and net cash. Thus, we lower our target price from Rs 2,000 to Rs 1,600,” it said.
Not all brokerages are positive on the stock.
see a potential downside on the counter with a target of Rs 1,210.
“Structural growth accelerators – options trading, institutional participation and intangibles introduction – are still in the slow lane. Moreover: regulatory risk challenging leadership; and revenue concentration in few commodities remain as risks. Given softer ADTV, we prune our FY23/FY24E EPS by 8 per cent each, leading to a revised target of Rs 1,120 (earlier Rs 1,280),” it said.
