MCX Share Price Drops 7% as Q4 Earnings Miss Estimates; Morgan Stanley Stays 'Underweight'

Tanushree Jaiswal 24th April 2024 - 04:47 pm

Multi Commodity Exchange of India (MCX) share price fell over 7% in early deals on April 24, a day after it reported positive but below-estimate numbers for the quarter ended March 2024. After reporting losses in the last two quarters, the company earned a net profit of ₹87.8 crore in Q4 and reported a 35% on-year rise in its revenue to ₹181.1 crore.

The MCX board also declared a final dividend of ₹7.64 per equity share for FY24. As per its regulatory filing, the company's operating income during the quarter under review jumped 35.43% Y-o-Y to ₹181.14 crore, but fell 5.42% sequentially.

The MCX also saw its margins expand sharply to 56.3% as against 1.6% during the same period of the previous fiscal year.

Morgan Stanley maintained its 'underweight' rating on the stock with a target price of ₹2,085, a downside of around 48%. It is likely that the company missed its Q4 net profit (PAT) estimates and consensus sharply. Also, the operating revenue came in lower than its estimates.

The firm's costs came in higher than estimates, as well. The international brokerage pointed out that it awaits the analyst call to get details on the operating revenue breakdown and understand recurring costs better.

Today, at 9:53 a.m. IST, shares of the MCX were trading at ₹3,749.55 on the NSE, down 6.9% from the previous close. The stock had zoomed 155% in the last one year, massively outperforming the benchmark Nifty 50 which has risen 26% during this period.

Earlier this month, Motilal Oswal bumped up its rating on the stock to a 'buy' with a target price of ₹4,300 per share. MCX is looking to grow volumes by launching new products, such as Steel Bar, Gold Serial contracts, and Power contracts.

"Once the future volumes on these products exceed the threshold of ₹800-1,000 crore (one-year average daily turnover) options, contracts will also be launched," the brokerage firm said.

Around 90% of the current volumes in the options segment are from crude oil and natural gas segments. MCX could possibly launch smaller contracts and weekly expiry products in the bullion segment, which will boost volumes, analysts said.

MCX is also looking to launch power future contracts, which are unavailable at present in the market.

"The approval for these contracts rests with the SEBI and CERC. Considering the interest from private companies looking to sell their surplus captive power generation, there is substantial potential for these contracts,” said Motilal Oswal in its report, adding that some regulatory measures can help boost participation for the MCX.

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Tanushree Jaiswal

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