- Macquarie called MCX a phoenix for recovering from near-death and dominating commodities trading
- MCX shares rose 1.3% on NSE, reaching a high of Rs 3,351.1 shortly after market open
- Brokerage set MCX target price at Rs 3,820, implying over 13% upside from current levels
The Multi Commodity Exchange of India Ltd. was deemed a phoenix by Macquarie on recovery from a near-death situation, as a result, the shares of the company opened 1.3% higher on the NSE.
The share price rose to a high of Rs 1.70% to Rs 3,351.1 shortly after the opening bell. The brokerage credited MCX's near monopoly on commodity trading as being the force behind its recovery.
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"We deem MCX 'The Phoenix' as it has recovered from a near-death situation and leveraged its first-mover advantage to dominate commodity trading," Macquarie stated in its note.
The brokerage has fixed a target price of Rs 3,820 for MCX, implying an over 13% upside to its current market price.
Macquarie noted that despite the 57% compound annual growth rate (CAGR) in commodities trading over Financial Year 2020-26, MCX remains underpenetrated due to a lower number of investors, products, and volumes compared to other geographies and other securities.
"We estimate notional value CAGR of 15-20% over FY26-30E," the brokerage said while adding that MCX has built a deep moat and is improving its value proposition with new products broadening the base.
MCX's first-mover advantage has offered the company a monopolistic market share of 98% alongside powerful network effects, according to Macquarie.
"The company is the go-to platform for commodity price discovery and hedging in India and has built a moat that NSE, BSE, and other commodity exchanges have not been able to cross. Additionally, CAS does not affect MCX," the brokerage outlined.
The brokerage estimated a revenue CAGR of 19% over FY26-30E, driven by an increase in the number of investors and number of products.
"Our thesis for MCX rests on revenue growth versus margin expansion, as the volume surge has driven the company to peak margins," Macquarie stated.
The key catalysts for the exchange include increasing FII participation, permission for weekly contract expiry, and liberal policy on new services such as co-location.
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