Multi Commodity Exchange

Buy Multi Commodity Exchange; target of RS.18**

Buy Multi Commodity Exchange with a target of RS.1,800: ICICI Securities

MCX reported healthy Q1FY21 earnings, including healthy other earnings and lower OPEX average daily turnover (ADTO) decline. The reduction in trading hours between Kovid in April 2020 affected ADTO by 16% YOY to Rs 23,129 crore in Q1FY21. 27473 crore in Q1FY20 and Rs. 36,626 crore in Q4FY20. As a result, revenues fell 8.1% to Rs 73 crore. MCX reported an increase of 11 511 bps YOY, 0 270 bps QoQ 96.71% in its market share. Other income was Rs 49.7 crore and lower OPEX supported EBITDA, with EBITDA margin (excluding other income) reported Rs 16.5 crore b 150 bps YOY ​​increased by 36.3%. However, the higher tax rate limited traction increased by 29.2% to Rs 56.4 crore. The PAT margin was at 77.3% in June 2020 and at 55% in June 2019.

Outlook

Currently, MCX trades at ~33x FY22E EPS. Given leadership in commodity space, strong efficiency, we remain positive on the stock. Hence, we revise the target price to Rs 1800/share, valuing the stock at 44.1x FY22E core earnings and adding net cash after deducting SGF. Maintain BUY.

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