Multi Commodity Exchange of India Limited (MCX) is India’s first listed, national-level,
electronic exchange. It is also the first exchange to introduce commodity options
in India. In the financial year 2019-20, the market share of MCX was at a record
high of 94.01%
- High Operating Leverage Business Model
Multi Commodity Exchange of India (MCX) reported robust operating performance in
Q2FY21 led by EBITDA margin expansion driven by the high operating leverage inherent
in the business model. In Q2FY21, MCX’s total commodity futures turnover and
revenues grew 12% YoY, but operating cost increased by only 2% YoY.
- Market Leadership with Monopolistic position in multiple commodities
MCX was able to enhance its market share to over 95% in the commodity derivatives
market. This was despite the launch of commodity derivatives by both BSE and NSE.
- Robust volume growth to be driven by bullion
MCX added five more locations to the list of additional delivery centres for gold
and gold mini contracts this is aimed at enabling lakhs of jewellers, big and small,
to conveniently take physical deliveries of gold through exchange mechanism from
their nearest locations.
- Introduction of New products and increasing institutional participation
MCX recently launched cash settled index products – ICOMDEX Bullion and ICOMDEX
Base. Along with newer products MCX is witnessing increased participation from mutual
funds, portfolio managers and AIFs.
Outlook & Valuation
We believe that continued price volatility will lead to strong growth in volumes
and we expect higher volumes in the gold segment to continue amid prevailing global
uncertainty. We are bullish on MCX given undisputed leadership position, healthy
growth in ADTO and launch of new products. Future growth levers includes gradual
traction in option trading and charging of newly launched products with increased
institutional participation. MCX is currently trading at 30x FY22 E earnings.