MCX share price jumps 6% after Motilal Oswal upgrades stock to ‘Buy’, sees 15% upside

MCX share price jumped 6% in early trade on Wednesday after brokerage firm Motilal Oswal upgraded its ratings on the stock. Multi Commodity Exchange of India or MCX shares rose as much as 6.05% to ₹3,958.00 apiece on the BSE. 

Motilal Oswal highlighted several near to medium-term drivers of volume growth for MCX such as new product launches – futures & options (shorter duration contracts), continued volatility in key commodity prices amid global uncertainties, and a rise in retail participation in the options market. 

“We expect 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, we see meaningful re-rating potential,” Motilal Oswal said.

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It upgraded the stock to ‘Buy’ from ‘Neutral’ with a target price of ₹4,300 per share, based on 36x FY26E EPS, implying an upside of more than 15% from Tuesday’s closing price.

MCX will be looking to grow volumes driven by new products, such as Steel Bar, Gold Serial contracts, and Power contracts. Once the future volumes on these products exceed the threshold of ₹800-1,000 crore (one-year average ADTO) options, contracts will also be launched, Motilal Oswal said.

Retail participation in the Indian commodities market can improve significantly with the strong technology-based offerings from discount brokers, along with lower ticket-size contracts from MCX.

Moreover, regulatory measures, such as interoperability of margins between stock exchanges and commodity exchanges, allowing partial withdrawal of SGF or determining clients' margin requirements on net positions, if implemented, have the potential to further boost volumes, Motilal Oswal added.

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While the software transition from 63Moons to TCS has been completed, the MCX management’s primary focus is now directed toward scaling up the business. The software transition will also help in cost savings, leading to a marked improvement in profitability.

With all these factors and high volatility persisting in the energy basket, Motilal Oswal expects ADTV in the options segment to increase to ₹1.5 lakh crore in FY25 from ₹94,000 crore in FY24. 

The brokerage expects MCX to deliver an FY24-26 revenue, EBITDA and PAT CAGR of 28%, 205% and 157%, fueled by a 47% CAGR in options volumes.

MCX share price has jumped more than 27% in the past three months, and the stock is up over 157% in one year.

At 10:40 am, MCX shares were trading 5.98% higher at ₹3,955.20 apiece on the BSE. 

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