Broker's call: MCX (Buy)

| Updated on September 21, 2021

ICICI Securities

MCX (Buy)

Target: ₹1,890

CMP: ₹1,636.05

The key question for MCX is its ability to recover volumes post the impact of higher margin trading norm. Basis H1-FY22 average daily turnover (ADTV) (14 per cent/17 per cent lower than FY20/FY21), we have cut FY22 ADTV from ₹35,800 crore to ₹31,200 crore. MCX trading volumes have continued to trend lower post the implementation of margin regulations.

However, the ADTV recovery is not bound to be linear. As such, we have cut FY23E ADTV by only 5 per cent to ₹39,000 crore. Considering the reported ADTVs of about ₹32,400 crore in FY20, ₹31,200 crore in FY21, ₹43,300 crore in August 20 and ₹36,800 crore in February 21, ADTV of ₹39,000 crore is achievable by FY23, which should translate to FY23 EPS of ₹61.4 implying 26x FY23E P/E at CMP. Analysing the participant-wise turnover, we see the share of others (largely retail) dipped from 67 per cent in Apr-May 2021 to 63.6 per cent in August 21 in the futures segment.

In the options segment, share of others has shrunk from 61 per cent/64 per cent in April 21/May 21 to 52 per cent in August 21. Maintain ‘Buy’ with a revised target price of ₹1,890 (earlier: ₹1,930) based on 35x FY23E core EPS of ₹49.3 and free cash of ₹168 per share

Published on September 22, 2021

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