Multi Commodity Exchange of India - Monopolistic. Cutting-edge. Xciting! - Motilal Oswal

Dominant share; future ready; high growth potential

- Multi Commodity Exchange of India (MCX) is a state-of-the-art electronic commodities futures exchange, with near monopolistic market share (86% in FY12).

- Our expectation of sustained market leadership stems from its technological edge and future readiness.

- MCX's volumes have grown at a CAGR of 47% over FY07-12. Future potential remains exciting given: [1] likelihood of new products and participants with the FCRA Bill, [2] with 2m client accounts as compared with 19-20m demat accounts, the industry has only scratched the surface with respect to potential volumes.

- We believe value from MCX-SX (Stock exchange promoted by MCX and FTECH in 2008) is more definite than merely option value. Policy to maintain ~50% payout ratio is a key valuation positive. Our target price of INR1,440 implies 23% upside. We initiate coverage with a Buy rating.

Source : Equity Bulls

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