MCX hits new peak on healthy Q2 results; stock zooms 406% in 17 months

MCX share price has more-than-doubled or soared 129 per cent from its June-month low of Rs 2,917.

Shares of Multi Commodity Exchange of India (MCX) hit a new peak of Rs 6,679, up 2 per cent on the BSE in Monday’s intra-day trade in an otherwise weak market. The buying interest at the counter can be attributed to healthy earnings for September quarter (Q2FY25), led by continued strong traction seen in option volume and streamlining of software related expenses. In comparison, the BSE Midcap and Smallcap indices were down 1.6 per cent and 1.3 per cent, respectively, at 03.06 pm.

The company’s net profit increased by 39 per cent to Rs 153.62 crore from Rs 110.92 crore over the sequential quarter ended June 30, 2024. Revenue from operations rose 73 per cent year-on-year (YoY) and 21.9 per cent quarter-on-quarter (QoQ) at Rs 285.6 crore.

Option average daily turnover (ADTO) witnessed continued strong growth of 125 per cent YoY and 31.7 per cent QoQ at Rs 193,309 crore. Post a decline in Q4FY24, volume in futures contracts continued to gather strength for the second consecutive quarter at Rs 26,941 crore (up 43.6 per cent YoY & 3.7 per cent QoQ).

Robust traction in option volume has aided growth in earnings as well as valuation. Trend in growth in volume and new product launch act as catalyst for valuation ahead, ICICI Securities said in a note.

MCX share price has more-than-doubled or soared 129 per cent from its June low of Rs 2,917. In the past 17 months, it has skyrocketed 406 per cent from a level of Rs 1,320.65 on the BSE.

MCX is India's leading commodity derivatives exchange with a market share of about 98 per cent in terms of the value of commodity futures contracts traded in the financial year 2024-25 (April 2024 – September 2024). It offers trading in a diverse range of commodities, spanning multiple segments including bullion, energy, metals and agri commodities, as well as sectoral commodity indices. The exchange has forged strategic alliances with various international exchanges, as well as Indian and international trade associations.

MCX, in its FY24 annual report, had said that with the potential boost in commodity demand following the economic upswing, there could be new opportunities for the company to innovate and introduce new derivative products that fulfill the requirements of stakeholders in both agricultural and non-agricultural commodities. Therefore, the outlook for the company is positive, primarily due to expanding demand from the improvement in economic activities and the increasing need for commodity price risk management.

"With spread of education and awareness about commodity derivatives, as well as ease of access to the market platform brought mainly by technology-led innovations, MCX is likely to see increasing participation on its platform in the years ahead. Further, participation by financial institutions is also likely to gain momentum as clients increasingly look forward to gaining exposure to commodity derivatives using the services of institutions like Mutual Funds, Portfolio Managers and Alternate Investment Funds," the company said.