A “Monopoly’ market is a scenario where a single seller/producer assumes a dominant position in an industry or a sector. Listed below is one such monopoly stock in which Mutual Funds trimmed their stake during Q3FY23-24, viz, during the quarter ended December 2023:
Multi Commodity Exchange Of India Limited
With a market capitalization of Rs 16,338.35 crores, the stocks of Multi Commodity Exchange of India Limited (MCX) are currently trading at Rs 3,203.70, gaining approximately 0.30 percent as compared to the previous closing levels of Rs 3,194.35 apiece.
MCX is India’s first commodity derivative exchange facilitating online trading of commodity derivative transactions. MCX has a monopoly in the commodity exchange segment in India, with a market share of over 95 percent.
Having a glance at the latest shareholding pattern of the monopoly company, the Mutual Funds reduced their stake by 4.37 percent during Q3FY23-24, viz, from holdings of 35.1 percent during Q2FY23-24 to holdings of 30.73 percent during Q3FY23-24. The trim in the stake is supported by a reduction in the after-tax profits during the September 2023 quarter.
The prime indicators of business, such as operating revenues and after-tax profits, showed opposing movements during the recent periods.
The former increased from Rs 146 crores during Q1FY23-24 to Rs 165 crores during Q2FY23-24, and the latter, keeping the timeframe the same, showed a contrasting move, turned into losses of Rs 19 crores from profits of Rs 20 crores.
Due to the monopoly status, the company’s net profit margins have stayed at above-average levels of around 40 percent during FY21-22 and around 30 percent during FY22-23. According to the recent presentations, the company is working on launching new products, including steel TMT bars & electricity derivatives.
In the past six months, the stocks of MCX have delivered close to multibagger returns of 98.3 percent for its shareholders, i.e., from share price levels of Rs 1,615 during July 2023 to the current stock price level.
Founded in 2003, Multi Commodity Exchange of India Limited is a ‘deemed’ Stock Exchange based in India that is recognized under the Securities Contracts (Regulation) Act, 1956. The company facilitates online trading as well as the clearing & settlement of commodity futures transactions, thereby aiding as a risk management platform.
Written by Amit Madnani
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