Revenue est. for FY21/22E is lowered by 10.0/3.8% to factor in Covid-19 impact. We assign 30x to FY22E core PAT and add net cash (ex SGF) to arrive at a TP of Rs 1,330. Maintain ADD. MCX delivered healthy volume growth in 4Q (+35.7% YoY) and expanded market share by 240bps to 94% in FY20. After strong 4Q, volume dropped significantly in April-20, due to reduction in exchange timings and a sharp drop in crude prices (Covid-19). Volume recovery was witnessed in May-20, but its still 35% below the 4Q level. Crude (45.4% of vol. in FY20) is impacted due to the high margin requirement (100%), extreme volatility, and negative settlement price. We dont see crude volume reaching the previous level in FY21E. Tailwinds like launch of Index futures and Institutional participation will aid volume recovery.

Revenue growth (33% YoY) was strong despite the fizzling out of volumes over the last week of Mar20 on news of reduction in the number of trading hours. Management indicated that crude volumes remain dented as the sentiment of participants was impacted due to (a) negative price settlement issue, and (b) increase in margin requirement. As volatility reverts to manageable level, company is optimistic about the reduction in margin requirement and Company has hinted at lockdown impact on its warehouse operations. During May, while traded value across Gold (+69% YoY), Silver (+121% YoY) and Nickel (+62% YoY) recovered, Crude (-78% YoY) and base metals continued to drag the overall We upgrade our EPS estimates over FY21-22E by 3-6% as we adjust our EBITDA margin trajectory. As the volatility reverts to manageable level, the company is optimistic of reduction in margin requirement and improvement The company has hinted at lockdown impact on its warehouse operations.

Precious metals like gold and silver reported a robust increase of ~120%/133% in total value of contracts traded. Volatility in crude prices led to a surge in speculation activity translating into ~60% YoY growth in traded value During the quarter, while growth in traded value of gold and silver was more pronounced in Feb and March, it was more front ended for crude (toward Jan and Feb) due to the sharp fall in crude prices. Most of the base metals continued to show a trend of decline (YoY) due to the compulsory delivery rule, which impacted the interest levels of speculators and arbitrageurs. Base metals continue to report declines, largely led by the compulsory delivery rule, which impacted the interest levels of speculators and arbitrageurs. Despite the one-off near-term impact on 1QFY21E (0% YoY revenue growth), we expect strong ~14%/18% revenue growth over FY21/22, primarily led by precious metals and crude.

Regulatory tailwinds like Institutional participation, Indices (cash settled) and new options contracts will boost volumes and increase depth. Globally Institutions account for ~50% of the total derivatives volume. MCX's focus on improving the physical delivery mechanism and local price discovery for key commodities will provide a platform for long term sustainable growth. We estimate revenue/EBITDA/PAT CAGR of 21/45/26% over FY19-22E. The stock trades at P/E of 27.0/21.5 FY21/22E EPS, which is reasonable, considering healthy growth, tight cost control, RoIC of ~50% and huge cash (~22% of Mcap). Risks include regulatory delays, increase in competition and drop in commodity volatility. We maintain BUY on MCX based on in-line revenue and margin beat in 3QFY20. Market share (94%) is steady despite rise in competition. Embedded non-linearity and cost control is leading to margin expansion. Regulatory tailwinds, healthy growth in unique client codes (UCC), launch of Indices and increased volatility will aid volume growth. We assign 30x to core Dec-21 PAT and add net cash (20% discount) to arrive at TP of Rs 1,370.

Regulatory tailwinds like Institutional participation, Indices and tie-up with Retail bank subsidiaries can boost trading volumes further and increase depth in the long run. Globally Institutional clients account for ~50% of the total derivatives volumes. We continue to remain constructive on the long-term growth opportunities and the concern related to increase in competition is behind us. There has been no impact of the whistle-blower letter and the physical delivery mechanism remains robust. We estimate revenue/PAT CAGR of 19/22% over FY19-22E. We see value in MCX based on (1) Embedded non-linearity, (2) ADTV growth, (3) Market leadership and (4) Net cash of Rs 14bn (~28% of Mcap). Risks include regulatory delays, increase in competition and drop in Bullion volumes and commodity volatility. We maintain BUY on MCX based on in-line revenue and margin beat in 2QFY20. Market share (94%) is increasing despite rise in competition. Embedded non-linearity and cost control is leading to margin expansion. We assign 30x to core Sep 21 PAT and add net cash (20% discount) to arrive at SoTP of Rs 1,175 (16% upside).

However, base metal volumes declined sharply due to (1) the SEBI's directive to allow trading of only one contract per commodity and (2) the switch from cash We expect volume/revenue/earnings CAGR (FY19-21) of 22%/24%/28%. Over the past few months, sentiment around MCX reversed from that of competition concerns to one of optimism largely driven by growth in bullion volumes. This is a reflection of the winner-takes-all nature of the business MCXs golden run in terms of volumes came at the time of significant run-up in gold and silver prices in FY12 and FY13. Over the last few months, sentiment around MCX has reversed from concerns around competition from the likes of BSE, to one of optimism, driven by multiple factors feeding into volumes growth. Its monopolistic market share has remained intact, and MCX has now ruled out the possibility of a price cut, which was earlier on the anvil.

5 September 2019 Those two international customers have been participating for some time now, and from November18 to June19, they bought the commodity and sold the same commodity. There is no remiss here and there is an opportunity to retest the quality. MCX retested and quality met the standards specified in the contract; the delivery too has been lifted. People tend to keep the stock on the delivery platform in order to be able to trade again. MCX entered into an agreement with a UK-based firm in July/August 2018 for gold and energy spot exchange platform development. Further enhancements will be taken care of by the internal tech team. Also, allegation of Chairman and Mr Paranjape travelling together to Europe is a figment of imagination. Three vaults where deliveries are given are in Ahmedabad. MCX had ~INR5b of insurance cover in two vaults and another INR10b in the third.

Regulatory tailwinds like Institutional participation, Indices and tie-up with Retail bank subsidiaries will boost trading volumes by ~10% and increase depth in the long run. Globally Institutional clients account for ~50% of the total derivatives volumes. We continue to remain constructive on the long-term growth opportunities, concerns on increase in competition and pricing pressure is gradually subsiding. The market is expanding with entry of new market participants and products. We estimate revenue/PAT CAGR of 18/15% over FY19-21E. We see value in MCX based on (1) Embedded non-linearity, (2) ADTV growth despite rising competition, (3) Market leadership and (4) Net cash of Rs 13bn (~30% of Mcap). Risks include regulatory delays and increase in competition. We maintain BUY on MCX based on in-line 1QFY20. The company has maintained market share despite increasing competition. Embedded non-linearity and cost control is leading to margin expansion. Regulatory tailwinds will boost volumes further. We assign 30x to core FY21E PAT and add net cash to arrive at SoTP of Rs 962 (13% upside).

MCX volumes can increase with regulatory tailwinds like institutional participation (MFs, PMS), launch of Indices, and partnership with retail bank subsidiaries. These can boost volumes by another 10%. The concern related to increase in competition and pricing pressure is subsiding. We don't see risk to existing volume and pricing. In fact, the market can expand with launch of innovative products and entry of new market participants. We estimate revenue/PAT CAGR of 18/14% over FY19-21E. We see value in MCX based on (1) Embedded non-linearity, (2) ADTV growth despite rising competition, (3) Market leadership and (4) Net cash of Rs 13bn (~30% of Mcap). Risks include regulatory delays and increased competition. We maintain BUY on MCX on in-line 4QFY19. The company has increased market share despite increasing competition. Cost control was impressive, led to margin expansion. We assign 30x to core FY21E PAT and add net cash to arrive at SoTP of Rs 950 (19% upside).

26 April 2019 Income from operations increased 2.9% QoQ to INR791m (226bp beat to our estimate of INR774m). EBIT grew 24% QoQ to INR211m, with the margin at 26.6% (47bp beat). PAT increased 45% QoQ to INR610m (PAT margin of 55%), significantly ahead of our estimate of INR348m, mainly due to the recognition of a minimum alternate tax (MAT) credit of INR206m for the year. EPS for the quarter was INR12.0 v/s our estimate of INR6.8. Income from operations increased 16% to INR3,000m from INR2,580m in the previous year. EBIT increased 45% YoY to INR1,925.2m, with the margin at 26.5%. Net profit increased 34% YoY to INR1,446m from INR1,081m in FY18. EPS rose 34% YoY to INR28.4.

Maintain BUY with a TP of Rs 957, implying a P/E of 30x to Dec-20E core earnings and adding back net cash. MCX delivered good set of numbers in 3QFY19. Revenue was up 8.2% QoQ to Rs 0.77bn (in-line with our est. of Rs 0.77bn), led by 7.9% QoQ increase in volume (Rs 17.03tn). MCX maintained its market share at 91% and ADTV grew 7.9% QoQ, despite increased competition from NSE & BSE. EBITDA margin was down 496bps QoQ to 27.2% largely due to higher other expenses. Excluding one-off margin was up 89bps QoQ to 33.1% but still below our estimate of 34.9%. Hedging activity in bullions is witnessing increased traction with open interest built up while metals volume is impacted due to shift from cash to physical settlement.

15 January 2019 Revenue grew 26% YoY to INR769m, in line with our estimate of INR766m. Futures volumes grew 34% YoY (+8% QoQ) to INR17t, dominated by crude (+78% YoY) and gold (+53% YoY). EBITDA margin of 27.2% (+500bp YoY, -500bp QoQ) was below our estimate of 34% due to higher other expenses (INR45m one-off). Excluding this one- time expense, the margin stood at 33.1% (90bp lower than our estimate). PAT growth of 124% YoY (to INR420m) exceeded our estimate of 68.5% YoY owing to higher other income (INR322m v/s our estimate of INR199m) and a lower tax rate (15.3% v/s our estimate of 24%), which emanated from some provisions and deferred tax. For 9MFY19, revenue/EBITDA/PAT were up 17.9%/47%/42% YoY. MCX highlighted that the uptick in volumes in recent past has not just been a function of volatility but also increasing participation. We expect volumes/revenue/earnings CAGR (FY18-21) of 20%/16%/22%.

Maintain BUY with a TP of Rs 980 implying a P/E of 30x Sep-20E EPS. MCX delivered muted set of numbers in 2QFY19, revenue was down 2.4% QoQ to Rs 711mn (vs our est. of Rs 734mn), led by 0.3% QoQ drop in volume (Rs 15.8 TN) and Rs 16.7mn impact from Liquidity Enhancement Scheme (LES). ADTV was up 1.2% QoQ and 12.2% YoY to Rs 246.55 bn led by Metals (+3.5%). Trading volume has picked-up in Sep-18, ADTV is at Rs 273.78bn (+22% YoY) led by Metals and Energy.

23 October 2018 Revenue increased 5.7% YoY to INR711m (2% below our estimate of INR726m) in 2QFY19. Lower-than-estimated revenues in the case of MCX are explained by either realization (mix of high- and low-volume orders) or by contribution of non-transaction revenues. EBITDA margin of 32.2% missed our estimate of 38%, led by [1] lower revenues and [2] higher Software expenses (INR145m v/s estimate of INR115m). PAT increased 23.3% YoY to INR359m (7.6% beat) owing to a lower tax rate (13% v/s 25%), which emanated from some excess provisions written back and deferred tax. MCX is expected to start monetizing Options in FY20, and there will be no transaction charges in 2HFY19 either. We expect volumes/revenue/earnings CAGR (FY18-20) of 19%/13%/16%. In our view, this merits caution not only from the perspective of potential loss of market share, but also in terms of any unexpected cut in pricing in the near future.

Maintain BUY with a TP of Rs 1,050 implying a P/E of 30x FY20E EPS. MCX delivered decent set of numbers in 1QFY19, revenue was up 3.2% QoQ to Rs 729mn (vs our est. of Rs 742mn), led by 5.5% QoQ rise in volume (Rs 15.8 TN) offset by 2.2% drop in realisations. ADTV was up 2.2% QoQ and 29.8% YoY to Rs 243.60 bn led by rise in Bullion (+5.7% QoQ) and Metals (+9.0%). Bullion volume has started to recover and current ADTV is only at 56% of the pre-demonitisation level, thus scope for catch-up is immense. Options volume jumped significantly (~12x) after introduction of LES in April-18 (ADTV of Rs 5.46bn vs Rs 0.46 in 3Q).

Maintain BUY with a TP of Rs 1,040 implying a P/E of 30x FY20E EPS (earlier 35x). MCX delivered robust set of numbers in 4QFY18, revenue was up 12.4% QoQ to Rs 706mn (in-line with our est. of Rs 716mn), led by 17.8% rise in volume to Rs 15TN. Total ADTV was up 17.8% QoQ and 22.6% YoY to Rs 238.2 bn led by rise in commodity prices and volatility. Encouraging part is that volume traction is even stronger in April-18, ADTV is up 26% QoQ to Rs 299.3bn led by 13/27% rise in bullion and metals volume.

MCX's 4QFY18 revenues grew 15.8% QoQ to INR706m v/s estimate of INR694m. EBITDA margin expanded ~12pp QoQ to 34.1%, compared to our estimate of INR34.8%. PAT grew 81% QoQ to INR340, in line with our estimate of 343m.The smart growth in sequential financial performance was a function of 17%QoQ growth in volumes to INR15t.

Lackluster volumes in Options since its launch in October 2017 Universal licenses becoming effective in October 2018, allowing for entry of competition and, thus, putting MCX's market share under threat Recent media articles citing CBI investigations into wrong-doings by erstwhile Forward Markets Commission (FMC) officials in granting MCX a nationwide commodity derivatives exchange status, as well as relaxation of rules for promoter shareholding before the company's IPO in 2012

Overall volumes for MCX have been soft because of multiple issues (demonetization, GST, PMLA) reducing Bullion volume to nearly a half in a span of a year. Over 9MFY18, while volume in Bullion declined by 30% YoY, that in Base Metals increased by 17%, thereby stemming the overall volume decline to 8%. The contribution of Bullion to overall volume has now come down to 23% (from 30% last year), whereas that of Base Metals has moved to 43% (from 34%).