Kotak cuts MCX India to 'reduce'; fair value Rs 500

Kotak Institutional Equities cuts MCX India from 'add' to 'reduce' with fair value of Rs 500.

Increased oversight from the commodity market regulator Forward Markets Commission, removal of additional margin requirements, reduced Financial Technologies India Ltd.'s involvement in MCX functioning (FTIL directors resigned from the board) are positive but factored into estimates and valuations, it says.

Says financials hit by commodity transaction tax implementation has led to 40% decline in turnover, Settlement Guarantee Fund contribution of around Rs 150 crore from the balance sheet and recurring contribution of 5% of gross revenues (including other income) and additional margin-led incremental 30% decline in turnover.

Stock last trading down 1.05%.