Comments
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
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.