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MCX : COMPANY UPDATE
Gold : Traded value & volatility Silver : Traded value & volatility
Traded Value (Indexed) - LHS Volatility - RHS Traded Value (Indexed) - LHS Volatility - RHS
1,000 8.0% 1,000 12.0%
7.0%
800 800 10.0%
6.0%
600 5.0% 8.0%
600
4.0% 6.0%
400 3.0% 400
4.0%
Top-4 traded commodities, 2.0%
200 200
1.0% 2.0%
accounted for 73% of MCX’s
- 0.0% - 0.0%
Q1FY16 trading. Crude Oil,
Jul-07
Aug-09
Jul-12
Aug-14
Oct-08
Oct-13
May-08
Apr-11
May-13
Nov-10
Feb-07
Sep-11
Feb-12
Jan-10
Jan-15
Mar-09
Mar-14
Dec-07
Jun-10
Dec-12
Jun-15
Feb-07
Sep-11
Feb-12
Jan-10
Jan-15
Mar-09
Mar-14
Dec-07
Jun-10
Dec-12
Jun-15
Jul-07
Aug-09
Jul-12
Aug-14
Oct-08
Oct-13
May-08
Apr-11
May-13
Nov-10
which had 31% share of
Q1FY16 trading, was the only
Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research
top-4 commodity, which saw
Crude Oil : Traded value & volatility Copper : Traded value & volatility
increased volatility and hence
Traded Value (Indexed) - LHS Volatility - RHS Traded Value (Indexed) - LHS Volatility - RHS
increased trading. 1,200 14.0% 500 14.0%
In Q1FY16, bullion trading 1,000 12.0%
400
12.0%
accounted for just 35% of 800
10.0% 10.0%
MCX’s trading. 8.0% 300 8.0%
600
6.0% 6.0%
200
400
4.0% 4.0%
200 2.0% 100
2.0%
- 0.0% - 0.0%
Jul-07
Aug-09
Jul-12
Aug-14
Oct-08
Oct-13
May-08
Apr-11
May-13
Nov-10
Feb-07
Sep-11
Feb-12
Jan-10
Jan-15
Mar-09
Mar-14
Dec-07
Jun-10
Dec-12
Jun-15
Feb-07
Sep-11
Feb-12
Jan-10
Jan-15
Mar-09
Mar-14
Dec-07
Jun-10
Dec-12
Jun-15
Jul-07
Aug-09
Jul-12
Aug-14
Oct-08
Oct-13
May-08
Apr-11
May-13
Nov-10
Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research
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MCX : COMPANY UPDATE
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MCX : COMPANY UPDATE
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MCX : COMPANY UPDATE
Valuation
We expect MCX to show a robust 36% FY15-18 also has 5% stake in MCX-SX (MCX Stock Exchange;
Premium valuation to earnings CAGR driven by a similar revenue growth. the status of MCX’s warrants in MCX-SX is sub-
MCX currently trades at 42x FY16 and 24x FY17 EPS. judice), ~3% stake in Dubai Gold and Commodities
sustain
We believe that MCX can command premium Exchange (DGCX), 51% stake in SME Exchange of
MCX will continue to trade India Limited and 100% stake MCXCCL(Multi
multiples as operating performance is boosted by
at premium valuations regulatory tailwinds. Thus we assign a target Commodity Exchange Clearing Corporation Limited).
(42x FY16E EPS – a multiple of 30x rolling 12-month forward earnings Owing to business continuity challenges, we aren’t
significant premium to arriving at a target price of Rs 1,530. The company attributing any value to these investments.
global peers), on account
of the company’s robust VALUATION : GLOBAL EXCHANGES
growth trajectory. M-Cap
Forward P/E (x) EPS Forward P/B (x) EV/EBITDA (x) ROE (%)
We expect MCX’s EPS to growth
Country (US$ 1-yr 2-yr PEG (x) 1-yr 2-yr 2-yr 1-yr 2-yr
(2-yr 1-yr fwd
grow at 38% CAGR from mn) fwd fwd
CAGR)
fwd fwd fwd fwd fwd
FY15-17, versus 11%, Emerging markets
which is the average EPS MCX (HDFC Sec estimates) India 893 41.5 23.9 38.1 0.63 5.5 5.2 39.4 17.9 12.3 22.5
growth of global peers Bloomberg Consensus estimates
BM&FBovespa SA Brazil 5,227 10.3 9.5 8.9 1.06 0.9 0.9 10.4 9.6 7.7 8.2
Bursa Malaysia Bhd Malaysia 1,111 20.2 18.6 8.6 2.17 5.6 5.7 12.7 11.7 27.5 28.8
Bolsa Mexicana Mexico 1,047 18.6 17.0 11.4 1.50 3.3 3.0 11.3 10.3 16.7 18.0
Multi Commodity Exchange India 893 34.8 25.6 33.1 0.77 4.7 3.9 20.6 15.5 12.2 15.9
EM average 18.7 16.4 15.0 1.35 3.6 3.4 12.5 10.3 17.0 17.9
Developed markets
CME Group USA 32,793 22.5 20.9 11.6 1.80 1.5 1.5 13.5 12.5 6.5 6.4
Hong Kong Exchanges Hong Kong 32,779 24.6 21.7 14.0 1.56 10.8 10.2 2.3 2.1 44.5 47.6
Intercontinental Exchange USA 26,186 17.6 16.1 9.7 1.66 2.1 1.9 11.8 10.7 10.9 11.4
Deutsche Boerse Germany 17,671 18.7 16.8 11.9 1.41 4.4 3.7 12.4 11.4 21.6 21.5
Nasdaq OMX USA 8,916 14.8 13.5 8.5 1.59 1.6 1.5 9.6 9.0 9.8 11.1
Japan Exchange Group Japan 9,437 27.9 26.5 4.1 6.39 5.0 4.3 16.4 16.1 15.6 15.0
Singapore Exchange Singapore 5,971 20.1 16.9 13.9 1.22 8.5 7.4 13.7 12.1 38.4 40.6
ASX Australia 6,159 19.9 18.8 5.0 3.72 2.2 2.2 13.0 12.3 11.0 11.5
CBOE Holdings USA 5,207 25.7 23.5 10.0 2.35 23.0 20.0 13.4 12.3 76.8 75.1
Hellenic Exchanges Greece 321 12.8 12.2 12.6 0.97 1.7 1.5 4.7 4.3 11.7 13.6
NZX Ltd New Zealand 179 18.2 15.5 10.1 1.54 5.1 6.2 9.5 8.4 27.5 31.6
Developed markets
20.2 18.4 10.1 2.20 6.0 5.5 10.9 10.1 24.9 25.9
average
Global average 19.8 17.9 11.4 1.97 5.4 4.9 11.3 10.2 22.8 23.8
Source: Bloomberg, HDFC sec Inst Research Note: 1-yr refers to FY16/CY15 & 2-yr FY17/CY16
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MCX : COMPANY UPDATE
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MCX : COMPANY UPDATE
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MCX : COMPANY UPDATE
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MCX : COMPANY UPDATE
RECOMMENDATION HISTORY
MCX TP
Date CMP Reco Target
1,700 5-Feb-15 859 BUY 1,180
1,500 16-Feb-15 860 BUY 1,180
1,300 27-Feb-15 1,039 BUY 1,180
1,100 2-Mar-15 1,190 BUY 1,530
900 15-May-15 1,053 BUY 1,530
700 7-Aug-15 1,118 BUY 1,530
500
300
Rating Definitions
BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period
Apr-15
Sep-14
Feb-15
Jun-15
Jul-15
Mar-15
Dec-14
Oct-14
Aug-14
Aug-15
Nov-14
Jan-15
May-15
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period
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MCX : COMPANY UPDATE
Disclosure:
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Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further
Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.
Any holding in stock –No
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