Bernstein has initiated coverage on Multi Commodity Exchange of India (MCX) with an ‘Outperform’ rating and a 12-month target price of Rs 3,830, implying 15% upside from the stock’s September 7 closing price of Rs 3,330, as it sees strong momentum in commodity derivatives volumes and further room for retail participation to grow.
The brokerage prefers MCX over BSE, as it expects the growth in commodity derivatives to continue while equity derivatives enter a period of moderation. Bernstein said MCX’s contract volumes have shown stronger-than-expected momentum, with options contracts traded rising 4.3 times year-on-year in August and futures contracts increasing 2.1 times.
Bernstein expects the momentum to translate into higher earnings estimates. It is 11% ahead of consensus on MCX’s FY27 options volume estimates and 7% ahead on futures volumes. It is also 10-12% ahead of consensus on FY27 and FY28 earnings.
The brokerage expects MCX’s revenue from operations to rise to Rs 30,098 crore in FY27 from Rs 23,020 crore in FY26, according to its estimates. Net profit is projected to increase to Rs 18,394 crore from Rs 13,314 crore over the same period. The figures in the report are in Rs million, implying Rs 30,098 crore and Rs 18,394 crore respectively.
Bernstein’s view is based on a continuing shift of traders towards commodity derivatives. It estimates that only around 25% of retail equity derivatives traders currently participate in commodity derivatives, leaving significant room for cross-selling as brokers look to diversify their revenue away from equity options.