UBS maintains buy rating on MCX, raises target price to Rs 2,100 a share

Recently, the company informed that it has resolved trading procedure issues, completed the final code freeze, and resumed daily mock trading on the new platform starting from September 1.

‘);
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var pparr= new Array(‘Monitoring your investments regularly is important.’,’Add your transaction details to monitor your stock`s performance.’,’You can also track your Transaction History and Capital Gains.’);
var phead =’Why add to Portfolio?’;
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alert(‘Please select at least one ‘+disNam);
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AFTERLOGINCALLBACK = ‘overlayPopup(‘+e+’, ‘+t+’, ‘+n+’)’;
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window.open(postfolio_url, ‘_blank’);
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AFTERLOGINCALLBACK = ‘pcSavePort(‘+param+’, ‘+call_pg+’, ‘+dispId+’)’;
commonPopRHS();
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typparam = t;
typparam1 = n;
check_login_pop(1)*/
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$(“body”).append(”);
$(“#lightbox_cb”).css({
filter: “alpha(opacity=80)”
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$(“.linkSignUp”).click();
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$.get(‘//www.moneycontrol.com/techmvc/mc_apis/stock_details/?classic=true&sc_id=’+stk_str, function(data) {
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}
}

Brokerage firm UBS maintains “buy” rating for Multi Commodity Exchange of India (MCX), raising the target price to Rs 2,100 (up from Rs 1,950 per share). They’ve also revised MCX earnings estimates by 26% for the fiscal year 2024 and a 3-6% increase for FY25-26. These changes are attributed to robust options volume and improved operating leverage, following a one-time software cost associated with 63 moons in Q2-Q3 FY24.

In its recent report, UBS notes strong options trading in India, with an average daily value (ADV) of Rs 870-890 billion from August to September 2023, which was driven by the energy sector and improved bullion product performance. For the second quarter of FY24, Options ADV reached Rs 794 billion, up 28% QoQ and 150% YoY. August 2023 showed more even trading volume distribution, indicating better long-term liquidity. In the short term, there may be a slight decrease in the premium to notional ADV ratio. Futures trading ADV was Rs 180 billion in Q2FY24, down 16% QoQ and 24% YoY. However, revenue growth is estimated at 6.5% QoQ and 22% YoY, the report added.

Recently, the company informed that it has resolved trading procedure issues, completed the final code freeze, and resumed daily mock trading on the new platform starting from September 1. MCX aims to finish the transition by the end of September 2023 and anticipates no issues with introducing contracts for January 2024.

“Tech transition has been an overhang for a while, so completion of the process and stabilisation of the new platform is the key near-term trigger, in our view,” UBS said in its note.

According to media reports, the NSE intends to introduce energy commodity options (Crude oil and Natural gas) in October 2023, based on underlying futures launched in May 2023. NSE’s WTI Crude Futures have seen an average daily value of about Rs 0.3 billion in recent months.

“We are less worried because the leading exchange usually attracts the most trading volume, ensuring better liquidity. We are monitoring this closely to observe volume trends and the impact of the options launch,” the UBS report added.