Target: ₹1,786

CMP:₹1,517.20

The Multi Commodity Exchange of India Limited (MCX) is India’s largest commodity derivatives exchange that facilitates online trading of commodity derivative transactions, thereby providing a platform for price discovery and risk management, with a market share of 96.8 per cent.

MCX offers trading in commodity derivative contracts across various segments, including bullion, industrial metals, energy, and agricultural commodities. The exchange has an extensive network of 587 Registered Members and 51,489 authorised persons with a presence in 872 cities and towns across India as on Sept’22.

The company recently introduced Options Contracts on commodities traded on its platform, and the Average Daily Turnover (ADT) of Options has already surpassed the ADT of the Futures contract.

We initiate our coverage on MCX with a Buy rating and a target of ₹1,786 (45x FY24 Core EPS). MCX is at a pivot point where it has gained massive traction in Options Contract, rapidly expanding product offering, regulatory tailwind, and margin expansion expected from developing its CDP.

The commodity market in India is still at a nascent stage and with more than 90 per cent market share, MCX is likely to be key beneficiary of the same.