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ICICI Securities Report
Volume rise in options has been our consistent investment thesis on Multi Commodity Exchange of India Ltd. Options average daily trading volume has crossed Rs 400 billion as of the first 16 days of September 2022-to-date from Rs 78 billion in Sep-21.
This rise can be attributed to steady recovery from the impact of peak margin norms from Sep-21 and continued volatility in commodity prices.
Options volumes can maintain the current momentum with the expected launch of new products such as gold monthly options with gold (1kg) futures as the underlying asset.
Based on volume trends, MCX could report 28% QoQ growth in operating profits in Q2 FY23E.
Strong industry position rules out any cut in multiples. Hence, once the gain from rising options volumes outweighs the decline from lower futures volumes, the ensuing growth in earnings will add significant upside to the stock.
MCX seems to be in that zone currently with options growing and futures volumes remaining steady.
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