Buy Multi Commodity Exchange of India, target price Rs 1,700: ICICI Securities

ICICI Securities has buy call on Multi Commodity Exchange of India with a target price of Rs 1226. The current market price of Multi Commodity Exchange of India is Rs 1,700. Time period given by analyst is one year when its price can reach defined target.

Multi Commodity Exchange of India, incorporated in the year 2002, is a mid cap company (having a market cap of Rs 6384.23 Crore) operating in financial services sector.

Its key products/revenue segments include fees & other charges and other operating revenue for the year ended March 31, 2021.


Financials
For the quarter ended June 30, 2022, the company has reported a consolidated total income of Rs 118.05 crore, down 2.47 per cent from last quarter total income of Rs 121.04 crore and up 8.36 per cent from last year same quarter total income of Rs 108.94 crore. Company has reported net profit after tax of Rs 42.10 crore in latest quarter.

The company’s top management includes Mr.Saurabh Chandra, Mr.Hemang Raja, Mr.Amit Goela, Mr.Chengalath Jayaram, Dr.Deepali Pant Joshi, Mr.Shankar Aggarwal, Dr.Bhartendu Kumar Gairola, Ms.Pravin Tripathi, Mr.P S Reddy, Mr.Chandra Shekhar Verma. Company has Shah Gupta & Co. as its auditors. As on June 30, 2022, the company has a total of 5 crore shares outstanding.

Investment Rationale
Based on volume trends, MCX could report 28% QoQ growth in operating profits in Q2FY23E. Strong industry position rules out any cut in multiples. Hence, once the gain from rising options volumes outweighs the decline from lower futures volumes, the ensuing growth in earnings will add significant upside to the stock. MCX seems to be in that zone currently with options growing and futures volumes remaining steady. Maintain BUY.

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of March 31, 2022, while FIIs owned 28.19 per cent, DIIs 46.66 per cent.