The shares of the Mid-Cap company specializing in commodity derivatives trading, offering a platform for trading futures and options contracts on various commodities, are in focus after a leading Global brokerage firm, UBS, initiated a Buy target of Rs. 10,000 (Earlier Rs. 7,000) with a 20 percent Upside Potential.
With a market capitalisation of Rs. 44,265.23 crores on Wednesday, the shares of Multi Commodity Exchange of India Ltd jumped upto 5.9 percent, making a high of Rs. 8706.35 per share compared to its previous closing price of Rs. 8215.75 per share.
Multi Commodity Exchange of India Ltd, engaged in commodity derivatives trading, offering a platform for trading futures and options contracts on various commodities, is in focus after a leading Global brokerage firm, UBS, initiated a Buy Target of Rs. 10,000 on it with an upto 20 percent Upside Potential from day’s opening price.
The reasons for the “Buy” target
Expanding Product Portfolio: UBS cited clearer visibility and an improving pace of new product launches. Recent introductions include electricity derivatives and monthly silver options, following the successful launch of monthly gold options in November 2024.
Revenue Upside: Electricity derivatives could contribute 3% of revenue in FY28, with potential for further upside. New silver options are expected to gain traction, similar to gold options, further diversifying revenue streams.
Earnings Upgrade: UBS has raised its FY27E-FY28E earnings estimates by 13-17%, driven by higher trading volumes and new product contributions, and expects a 26% earnings CAGR for FY26-28 based on operating leverage and expects earnings to increase by 15-20%.
Geopolitical Uncertainties: Ongoing global uncertainties are expected to sustain volatility, further supporting MCX’s trading volumes, and UBS pointed to higher volatility in key commodities as a driver of trading activity and volume growth.
Financials & Others
The company’s revenue rose by 60.6 percent from Rs. 199.45 crore to Rs. 320.49 crore in Q4FY24-25. Meanwhile, the Net profit rose from Rs. 87.87 crore to Rs. 135.46 crore during the same period.
The company has a low PEG ratio of 0.13, indicating that its stock might be undervalued. It is also debt-free, showcasing strong financial health. Additionally, the company has achieved a solid average 3-year revenue growth of 23.06%, reflecting its robust business performance.
The Multi Commodity Exchange of India Limited (MCX) is India’s largest and most prominent commodity derivatives exchange, established in 2003 and headquartered in Mumbai. MCX operates under the regulatory framework of the Securities and Exchange Board of India (SEBI), providing a secure, transparent, and efficient platform for online trading in commodity futures and options across a diverse range of segments, including bullion, industrial metals, energy, and agricultural commodities.
In FY24-25, the MCX commodities futures turnover distribution is as follows: Silver (33.46%), Gold (31.12%), Natural Gas (17.27%), Copper (7.06%), Crude Oil (6.56%), Zinc (2.81%), Aluminium (1.35%), Lead (0.30%), INDEX (0.04%), and Others (0.04%).
Written by Sridhar J
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