Multi Commodity Exchange tanks after extending IT contract at higher cost

BENGALURU (Reuters) - Shares of Multi Commodity Exchange of India (MCX) tanked as much as 14% on Friday after the company, late on Wednesday, extended the services of software vendor 63 Moons Technologies for six months at a higher cost.

The company renewed the contract for 1.25 billion rupees ($15.24 million) per quarter, beginning July 1, compared with 810 million rupees in the previous renewal and 600 million rupees before that.

63 Moons Technologies's long-term contract ended last year. The commodity exchange MCX had selected Tata Consultancy Services (TCS) as its new service provider in 2021.

MCX is better prepared to migrate to the new commodity derivatives platform, the company said in a statement on Wednesday, adding that MCX decided to extend the support from 63 Moons to ensure necessary compliances.

MCX's transition to the TCS-run platform has been delayed, despite the company assuring analysts and its investors that the transition would take place by end-June.

The delay will impact new product launches as well as an increase in foreign investor participation, Motilal Oswal analysts said in a note, cutting their earnings per share estimate by 69% for fiscal 2024.

Meanwhile, 63 Moons said in a statement on Thursday that the software company had "once again agreed to the eleventh-hour request by MCX."

"We sincerely wish that this 'last time' really happens someday," 63 Moons said, adding that MCX has not opted for an offer to purchase software source code.

Shares of 63 Moons rose 11.6% on the contract renewal.

MCX shares, which are down about 5% so far this year, were last down 10.1%.

($1 = 82.0170 Indian rupees)

 

(Reporting by Sethuraman NR in Bengaluru; Editing by Janane Venkatraman)