We split the change in MCX average daily trading volume (ADTV) in terms of price and volume to determine their respective contribution to the overall ADTV. MCX witnessed a robust ADTV growth since FY17 led by higher commodity prices in 4 out of 5 years. FY21-TD has seen a similar trend as change in ADTV was driven by higher commodity prices. As such, MCX does become a play on rising commodity prices (Average Crude / Natural Gas / Copper / Lead / Nickel prices are up 12% / 11% / 5.8% 4% / 3.7% on MoM basis). Lower margin on crude and monetisation of indices are near-term positives.
- Maintain BUY: We factor Rs400bn ADTV in FY23E and believe there are upside risks to this estimate (Rs357bn ADTV already achieved in Feb'21). Based on Rs400bn ADTV estimate for FY23, MCX is likely to deliver Rs3bn PAT in FY23 (EBITDA CAGR of 21% between FY20-23E). Maintain BUY with a target price of Rs1,746 (unchanged).
- Why Rs400bn ADTV in FY23 is achievable? (a) The highs of historical ADTV still remain distant (Rs503bn as of FY12), (b) the addition of FY20 crude ADTV and FY21 non-crude ADTV will itself add up to Rs420bn and (c) current Feb'21 ADTV is already at Rs357bn.
FY21-TD ADTV has declined Rs8bn largely on account of a sharp drop in crude volumes and offset by higher prices. Ex-crude, ADTV is up Rs96bn in FY21-TD, which was largely driven by the rising bullion prices.
Shares of MULTI COMMODITY EXCHANGE OF INDIA LTD. was last trading in BSE at Rs.1509.9 as compared to the previous close of Rs. 1512.75. The total number of shares traded during the day was 14674 in over 1443 trades.
The stock hit an intraday high of Rs. 1531.05 and intraday low of 1499. The net turnover during the day was Rs. 22178400.