MCX India IPO – Revival of the Sluggish Primary Market ?
February 22, 2012
Multi Commodity Exchange (MCX), is the largest commodity exchange in India with 80% market share and 5th largest commodities exchange in the world is offering shares for sale by existing investors to comply with the regulatory requirements.
MCX Core Business – MCX offers trading in 49 commodity futures including bullion, ferrous and non-ferrous metals, energy and agriculture. The total value of commodity futures contracts traded on MCX in 9mFY12 was Rs119,807 bn, and has grown at a 45% CAGR in the last four years. MCX had 2,153 members, with over 296,000 terminals to accept client orders including CTCL spread over 1,572 cities and towns across India. Silver, Gold, Crude Oil and Copper dominate the value with c.90% of total value traded.
What is not Written in any of the reports is MCX is in direct competition with the National Stock Exchange of India. MCX’s ambition is to displace the NSE of its premium exchange status in the Equities and Derivatives market but is facing resistance from various corners including the SEBI.
MCX has been profitable in the last 3 Financial Accounting Years. Annualizing the 9 months earnings, MCX is expected to report an EPS of Rs 57 for FY 2012 which will be at P/E of 15 to 18 on offer price of Rs 850 to Rs 1032.
The only drawback or negative which we are overlooking is the shady background of the promoters which is so essential in the Dirty Corporate India. Investors can SUBSCRIBE to the Issue from the point of view of Listing Gains [If markets Fall due to Uttar Pradesh Elections, Listing Gains will be Minimal] as well as Long Term Holding. The issue seems to be priced decently and will this revive the sagging primary public issues market on Dalal street ?
You can view over a dozen Recommendations from Various Research Entities on MCX IPO here.