Multi Commodity Exchange of India Ltd. share price target

MCX posted 57% YoY growth in operating revenue, reaching INR3b (5% miss) in 3QFY25. Operating revenue rose 63% YoY to INR8.2b in 9MFY25.

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.

MCX posted 73% YoY growth in operating revenue to INR2.9b (5% above our estimate) in 2QFY25. Operating revenue rose 67% YoY in 1HFY25.

MCX plans to grow volumes by launching new products, such as serial contracts, index options, 10g monthly gold futures, cotton seed wash oil, crude sunflower oil contracts and many more in the pipeline.

Volumes have been strong in MCX across options and futures, as well as the premium conversion rates in Aug’24 after a weak Jul’24.

MCX’s Q1FY25 results had two main takeaways - steady cost profile established; and healthy rise in option volumes offset by lower premium conversion and resurgence in future.

Quarterly Update Q1FY25

MCX reported PAT of INR1.1b (5% miss) in 1QFY25, up 4.6x YoY and 26% QoQ. Excluding the voluntary contribution to core SGF, overall profitability was in line with our estimate.

MCX’s Q4FY24 results had two main takeaways – 1) slightly higher software cost profile than expected; and 2) the company taking more time before launching new products to gain confidence on new software

Quarterly Update Q4FY24

MCX will be looking to grow volumes driven by new products, such as Steel Bar
(launched), Gold Serial contracts, and Power contracts. Once the future volumes on these products exceed the threshold of INR8-10b (one-year average ADTO) options, contracts will also be launched.

Quarterly Update Q3FY24

Quarterly Update Q2FY24

Quarterly Update Q1FY24

Options ADTV has increased exponentially for MCX over the last few years (Q1FY24/Jul’23: INR 629/735bn) while futures ADTV has dipped below INR 200bn levels in Jul’23. Futures plus futures equivalent option volumes (on a like to like basis, MCX's unit revenue from one option notional ADTV is equal to 40% revenue earned from one future ADTV; this ratio keeps changing based on options premium turnover and the rates) stands at INR 478bn as of July23 versus INR 320bn in FY20, while our estimate for adjusted ADTV stands at INR 640bn for FY25E.

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.

Quarterly Update Q4FY23