Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Multi Commodity Exchange of India - Lower turnover impacted operating performance - Q3FY21 - ICICI Securities

Posted On: 2021-01-24 22:17:53 (Time Zone: Arizona, USA)


Positive developments for MCX include option pricing, but most of the growth optionalities (momentum in option pricing, introduction of cross-margin facilities for indices, incorporation of Indian commodity refiners, bank participation) remain on slow track. Near-term triggers would be reduction in crude margins further from 50% currently to ~25% while increasing the upfront margin regulations will be an overhang. In the medium term, it is likely that earnings will remain dependent largely on the volume of primary commodity futures.

- High margins (50% currently) remain an overhang on crude margins. The improvement in volumes post reduction in crude margin from 130% to 50% has been less than expected. While the management believes the reduction in margins from current 50-60% to ~25% would bring relief and boost crude volumes, some important considerations are as follows:

- Currently, there is a mismatch between volatility and margins on crude. While volatility is low, margins remains relatively high, which is a disincentive to traders.

- Since negative prices are now allowed in crude, the crude margins may not come back to original levels. Management indicated they expect the margins in crude to come back to ~25% finally, which will still be higher than previous base levels.

- Some of the lost crude volumes due to high margins have moved to LNG. As such, it is unlikely that there will be a complete recovery of volumes in crude if lower margins were to be restored. Some volume has already come back through LNG and some has come back due to already lower margins (130% to 50%). The volumes that can come back would be induced by reduction in crude margin from 50% to 20% depending upon when the regulator allows it.

- 9MFY21 crude ADTV was Rs26bn compared to Rs130bn in FY20. 9MFY21 LNG ADTV was Rs41bn compared to Rs15bn in FY20.

- Organic initiatives have led to higher volumes. MCX has increased Unique Client Codes (UCC) to 387k currently compared to 334k last year. New clients have contributed to 28% of the Q3 volumes. Additionally, 48% of the volumes have come from mobile platforms. As such, MCX has benefitted from the higher trading phenomena by new-generation internet users during the Covid lockdown as witnessed by equity exchanges too.

- MCX continues with the process of inducting Indian gold refiners' product in the exchange. Two Indian refiners have been identified and SEBI approval is awaited. Inclusion of Indian refiner products in MCX will result in better participation of Indian players in the bullion derivatives and higher prices might also encourage Indian refiners to list their products on the exchange.

- MCX is working on Indian lead refiners for incorporation of their product on the exchange. However, what could take longer is the incorporation of these products within the BIS (Bureau of Indian Standards) fold as suggested by SEBI.

- Bank participation is slow but picking up. Currently, six Indian banks are participating with a total ADTV of ~Rs3bn.

- Index volumes to be charged from 1st Apr'21: Currently, index volumes have crossed Rs3bn split between bullion/metal index reporting more than Rs2.7bn/Rs560mn in 9MFY21. MCX has applied to SEBI for cross-product lower margin provisions in case of index products. However, results are awaited. SEBI had rejected the application once in the past. Approval of this cross-margin facility can enhance volumes without increasing systemic risk in a certain way.

- Single Bullion Spot Exchange in Gift City: The IFSCA working group, in collaboration with all stakeholders, has decided that all Indian players will put up a single bullion spot exchange in the Gift City to be able to compete better with international players. India, being a high consumer of gold (25% of international volumes), should be able to take part in price discovery and volumes through this exchange.

- MCX has ~Rs160mn of MAT credit left.

- Renewal of contract for trading software in the final stages: The entire process is in final stages and the current vendor (63 Moons) is also participating.

- Options do not yet promise enough volumes for MCX to start charging. The total ADTV remains in the range of ~Rs8bn-9bn. Considering the charge will be on premium turnover and not on the notional turnover, the available revenue for MCX remains miniscule.

Shares of MULTI COMMODITY EXCHANGE OF INDIA LTD. was last trading in BSE at Rs.1673.4 as compared to the previous close of Rs. 1680.3. The total number of shares traded during the day was 19704 in over 1747 trades.

The stock hit an intraday high of Rs. 1692 and intraday low of 1663. The net turnover during the day was Rs. 33042496.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Wipro - Beware of integration / impairment risks! - ICICI Securities

Easy Trip Planners Ltd - IPO Review - ICICI Direct

ICICI Direct - Derivatives Weekly View (March 5): Level of 14700 remains crucial for upsides to continue...

Easy Trip Planners Ltd. - IPO - Strong Financials - Reliance Securities

Bharat Forge - Initiating Coverage - Constant evolution - HDFC Securities

Mahindra Logistics - Large-ticket deal win - ICICI Securities

Company Update - Huhtamaki India - ICICI Direct

Gladiator Stocks: IndusInd Bank, VIP Industries - ICICI Direct

Warehousing demand expected to grow around 160% to reach 35 million sq. ft in 2021: JLL

Telecom - Spectrum auction: Prudent investment by Bharti Airtel - ICICI Securities

JB Chemicals & Pharmaceuticals - Analyst meet takeaways - ICICI Securities

IPO Review - MTAR Technologies Ltd - ICICI Direct

Auto Sector - Monthly Volume Round-up - Feb 21 - Decent YoY Growth Continues

Aditya Birla Fashion and Retail - Focus on scaling up new businesses - ICICI Securities

Automobiles (wholesale) - Wholesales push continues despite modest retail trends - ICICI Securities

Aditya Birla Capital - Thoughtful (inclusive) conglomerate business evolution commands premium - ICICI Securities

Jubilant Foodworks - Buying in-the-money options - ICICI Securities

Multi Commodity Exchange of India - Play on rising commodity prices? - ICICI Securities

Gladiator Stocks - Sudarshan Chemical - ICICI Direct

Monthly Commodities Outlook - March 2021 - ICICI Direct

ICICI Direct - Monthly Currency Outlook: Rupee to depreciate further towards 75.00 level...

ICICI Direct - Covid Recovery Pulse - E-way bill generation in February 2021 starts on strong note...

Company Update - Virtual JLR Investor Event - Tata Motors - ICICI Direct

Analyst Meet Update - Aditya Birla Fashion and Retail - ICICI Direct

MTAR Technologies Ltd. - IPO - Huge Opportunities from Clean Energy Bodes Well - Reliance Research

ICICI Direct Derivatives Weekly View (February 26): Failure to move above 14700 may extend declines towards 14300...

Bank: Sector Credit Trends - Slows, Yet again - HDFC Securities

Piramal Enterprises - Pharma day highlights - ICICI Securities

Polymer price tracker - PVC prices rise sharply again! - ICICI Securities

Greenply Industries - Growth returns, at an inflection point - ICICI Securities

Tata Motors - JLR future proofing itself with rapid electric transition - ICICI Securities

Dairy - Higher freight cost and increase in Global SMP prices - ICICI Securities

Analyst Meet Update - Nestlé India (Hold): Focus on product innovation, expanding rural reach - ICICI Direct

MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Rollover Report for February - March 2021 : Angel Broking

Reaction from industry experts on Q3FY21 GDP numbers

M. Govinda Rao, Chief Economic Adviser, Brickwork ratings on Q3FY21 GDP numbers

Mr. Dhiraj Relli, MD & CEO, HDFC securities views on Q3FY21 GDP Growth Number

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q3FY21 GDP

Rollover Analysis - Feb 21, 2021 - YES Securities

Consumer Durables - Demand-driven recovery continues - HDFC Securities

Cement - Demand surprises; earnings upgrade to continue - ICICI Securities

Gladiator Stocks - TeamLease Services - ICICI Direct

Gladiator Stocks - Metals to outshine post multi-year breakout... - ICICI Direct

Company Update - Sundaram Finance - ICICI Direct

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020