BSE share price, MCX shares down 10-20% from their peaks; Which exchange stock should you buy after correction>

Multibagger stocks, BSE and MCX shares have come off their record high levels after the recent sharp bull run seen on the back of strong fundamentals and robust trading volumes. While BSE share price is down around 20% from its peak, MCX share price has fallen around 10% from its 52-week high.

BSE, the oldest stock exchange in India, after its re-launch of BSE’s derivative contracts of Sensex and Bankex, is witnessing significant traction from market participants. It has increased derivatives transaction charges with effect from May 13, 2024. Thus, the derivatives segment is expected to see a strong revenue growth. 

The Multi Commodity Exchange of India (MCX), the largest commodity bourse in the country, commands a substantial market share in commodity derivatives trading and has seen its options volumes reaching record highs in Q4FY24, breaching the ₹1 lakh crore ADTV mark for its first time.

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Here’s a comparison between the fundamentals of both the exchanges, BSE and MCX shares.

BSE Q4 results

BSE reported a consolidated net profit of ₹107 crore in the fourth quarter of FY24, a rise of 16.5% from ₹92 crore in the year-ago period. The exchange’s profit for the full year FY24 increased 86% to ₹410.9 crore as against ₹221 crore in the previous fiscal year.

BSE’s revenue in Q4FY24 jumped 115% YoY to ₹488.5 crore, while it posted its best-ever revenue of ₹1,618 crore in FY24, up 70% YoY.

The re-launch of BSE derivatives products has proved to be a trend-changing measure. Increased member participation, new product launches (stock derivatives), rising awareness about products, and a shift in Bankex expiry would continue to drive market share gains for BSE.

Other levers that will support growth over the medium term include the repricing of derivatives contracts, co-location revenues, continued momentum in the Star MF business, growth in cash segment, possibility of levying a fee for listing of debt securities, start of operations at its Power Exchange, and the commencement of revenue from its Gold Spot exchange, Motilal Oswal said.

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MCX Q4 results

After reporting losses in the last two quarters, MCX posted net profit of ₹87.8 crore in Q4FY24 as against ₹5.4 crore in the same period of FY23. Its revenue from operations in the March 2024 quarter increased 35% to ₹181.14 crore from ₹133.75 crore, YoY. 

Volumes in the Energy segment jumped 121% YoY, fueled by a 127% YoY surge in crude oil volumes in Q4FY24. Bullion volumes rose 56% YoY, driven by 69% and 42% YoY rise in gold and silver volumes. Overall base metal volumes dropped 53% YoY, due to a 60% YoY decline in each Aluminum and Copper volumes in Q4FY24

MCX Q4 results had two main takeaways – slightly higher software cost profile than expected and the company taking more time before launching new products to gain confidence on new software. Its management expects software cost to remain stable and incremental revenues from growing volumes to directly flow into the bottom line. However, going ahead, software cost will also include license fees of 10% on energy contract revenue to CME.

Read here: MCX Q4 Results: Net profit at ₹88 crore vs loss of ₹5.4 crore, revenue up 35%; dividend declared

Share price performance

BSE share price has given multibagger returns as the stock has jumped more than 383% in the past one year and over 959% in three years. BSE shares have gained 20% year-to-date (YTD).

MCX shares have also given strong returns to investors as they have surged more than 184% in the past one year. MCX share price has gained 20% YTD and more than 15% in three months.

Valuations

Motilal Oswal firm raised its earnings per share (EPS) estimates for BSE by 6% and 10% for FY25 and FY26 to factor in a higher than expected growth in volumes; a higher profitability in CDSL and a lower-than-expected clearing and settlement cost. 

It reiterated a ‘Neutral’ call on BSE shares with a one-year target price of ₹3,000 apiece.

For MCX, Motilal Oswal expects it to deliver a CAGR of 27%, 231% and 166% in revenue, EBITDA and PAT over FY24-26, led by a 53% CAGR in options volumes. 

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“We highlight several near- to medium-term drivers of volume growth: 1) new product launches – futures & options (short-duration contracts); 2) continued volatility in key commodity prices (gold, crude oil & natural gas) amid global uncertainties; and 3) a rise in retail participation in the options market,” Motilal Oswal said.

Additionally, MCX has launched direct market access for Category II FPIs, which would drive volumes in the medium term. The brokerage expects no impact from competition on MCX's volumes, as similar products are currently available on other exchanges. With the technology overhang behind MCX and near-term potential drivers in place, it sees meaningful re-rating potential. 

The brokerage firm maintained its ‘Buy’ rating on MCX shares with a target price of ₹4,400.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.