Fundamental

MCX Limited Initiating Coverage



MCX Ltd. is India’s first listed Electronic Commodity Exchange Company. It is a state-of-the-art commodity derivatives exchange that offers nationwide online trading, clearing and settlement operations of commodity’s futures transactions as well as a platform for risk management services. It also provides commodity derivative contracts across varied segments including Bullion, Industrial Metals, Energy and Agricultural Commodities. MCX has dominant market share of ~93% in terms of the value of commodity futures contracts traded in H1FY20. We expect, the Company’s revenue / earnings would grow at ~19% / 27% CAGR respectively over FY19-22E led by 1) Traction in Average Daily Volume Traded (ADVT) driven by volatility in commodity prices, 2) gradual and steady rise in participation (Retail & Institutional), and 3) expected launch of new indices.

 

Outlook & Valuation: We believe MCX has the strong brand recall, robust distribution network; steady earnings visibility with 20% EPS CAGR (over FY19- FY22E), healthy operating margins, and strong cash flow, which would provide medium term earnings visibility. Further, we feel there is limited threat of competition in this segment. Currently it is trading at P/E multiple of 29.3x / 23.6x of FY21E / FY22E. We initiate coverage on MCX Ltd. with ACCUMULATE rating. We assign 28x P/E to FY22E and arrive at a target price of Rs 1405 potential upside of 19%.


Tags: Fundamental


Search Reports

SEARCH

Reports

Daily Market Update...

Nifty opened higher traded...

Read More

Daily Market Update...

Nifty opened positive but...

Read More

Daily Market Update...

Nifty opened down and traded...

Read More

Daily Market Update...

Nifty opened positive but...

Read More

Daily Market Update...

Nifty opened down and traded...

Read More

Axis Bank Ltd Q3FY20 -...

Axis Bank Q3FY20 earnings...

Read More

LTTS

SHORT TERM TRADING CALL: BUY...

Read More

ICICI PRUDENTIAL

SHORT TERM TRADING CALL: BUY...

Read More

HDFC Bank Ltd. Q3FY20 -...

HDFC Bank’s performance...

Read More

Tata Consultancy...

TCS came out with reasonable...

Read More

Subscribe to newsletter

Request a call back

DISCLAIMER: Investment in markets is subject to market risk, the views and investment tips expressed by our research entity on arihantcapital.com are product of their own. Whilst meticulous care has been taken to ensure that the facts stated are accurate and opinions given are fair and reasonable, neither the analyst nor any employee of our company is in any way is responsible for its contents and nor is its accuracy or completeness guaranteed. ArihantCapital.com offers the views and opinions for assistance only and these are not intended and must not be alone taken as the basis for an investment decision. We advise the users to check with certified experts before taking any investment decisions. The investments discussed in this material may not be suitable for all investors. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material.