Buy Multi Commodity Exchange of India, target price Rs 1890: ICICI Securities

ICICI Securities has buy call on Multi Commodity Exchange of India with a target price of Rs 1890. The current market price of Multi Commodity Exchange of India Ltd. is Rs 1582.45.

Time period given by analyst is one year when Multi Commodity Exchange of India Ltd. price can reach defined target.

Multi Commodity Exchange of India Ltd., incorporated in the year 2002, is a Mid Cap company (having a market cap of Rs 8126.85 Crore) operating in Financial Services sector.


Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 108.94 Crore, up .44 % from last quarter Total Income of Rs 108.46 Crore and down -11.21 % from last year same quarter Total Income of Rs 122.70 Crore. Company reported net profit after tax of Rs 39.87 Crore in latest quarter.

Investment Rationale
The key question for MCX is its ability to recover volumes post the impact of higher margin trading norm. Basis H1FY22 ADTV (14% / 17% lower than FY20 / FY21), the brokerage has cut FY22E ADTV from Rs358bn to Rs312bn. However, the ADTV recovery is not bound to be linear. As such, it has cut FY23E ADTV by only 5% to Rs390bn. Considering the reported ADTVs of ~Rs324bn in FY20, Rs312bn in FY21, Rs433bn in Aug’20 and Rs368bn in Feb’21, ADTV of Rs390bn is achievable by FY23E, which should translate to FY23E EPS of Rs61.4 implying 26x FY23E P/E at CMP.

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of June 30, 2021, while FIIs held 39.3 per cent, DIIs 36.7 per cent and public and others 24 per cent.