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ICICI Securities Report
Multi Commodity Exchange Of India Ltd. remains well positioned with approximately 97% in Q1 FY21 (up from 94% in FY20) share of Indian commodity exchange market.
The first four months of FY21 has been a tale of two halves with negative crude prices driven increase in margin requirements leading to sharp drop in total average daily trading volume in April-May 2020 (Rs 157/237 billion) while bullion driven uptick resulting in sharp jump in total ADTV June-July 2020 (ADTV of Rs 286/371 billion).
The uptrend accelerated in first week of August with ADTV of Rs 486 billion. Based on improved ADTV trend, we factor Rs 450 billion ADTV for the remaining FY21 and build 9% YoY growth in FY22.
We continue to MCX on 35 times FY22E core earnings. Increase in multiples will depend upon traction in new products (options and indices which continue to be devoid of any pricing and marginal in volumes).
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