MCX shares jump 5% to hit all-time high as UBS hikes target price to Rs 10,000
Global brokerage firm UBS has raised its target price on MCX shares to Rs 10,000, up from an earlier target price of Rs 7,000, while maintaining a 'Buy' rating on the same. Following the update, the shares of MCX rallied 5% to their all-time high of Rs 8,620 on the BSE.
ADVERTISEMENT The brokerage expects increased volatility in key commodities to support volume expansion on the exchange. UBS also highlighted an improving pace and visibility of new product launches, which could further boost investor sentiment.
MCX has seen strong trading volumes since April, with futures' average daily value (ADV) rising around 50% QoQ and options premiums ADV up 30% QoQ. Analysts at UBS expect this strength to persist amid geopolitical uncertainties.
New launches—like electricity derivatives, monthly bullion contracts, and upcoming index options—are likely to support near-to-medium-term growth.MCX recently launched electricity derivatives and monthly silver options. Initial analysis by the global brokerage firm suggests electricity derivatives could contribute 3–12% to revenue, with a conservative estimate of 3% in FY28 and room for upside.Silver options are expected to gain traction due to a preference for near-expiry contracts.
ADVERTISEMENT For context, after launching monthly gold options in November 2024, premium ADVs rose from Rs 1–2 bn to Rs 4–6 bn, and monthly contracts made up 80–95% of gold premium ADVs. These new launches are expected to support near-to-medium-term growth.MCX reported a sharp jump in Q1 trading volumes, with futures ADV rising ~50% QoQ from the earlier stable range of Rs 270–280 billion, driven primarily by increased activity in gold and silver.
ADVERTISEMENT Option premiums' ADV also grew 30% QoQ, reaching Rs 43 billion. Based on these trends, analysts estimate trading revenue growth of 34–35% QoQ and a 50% increase in PAT, aided by the absorption of seasonal Q4 expenses like higher staffing and license costs.Based on these trends, UBS has raised its FY27–FY28 earnings per share (EPS) estimates by 13–17%. MCX is currently trading at around 42x FY27E PE, and analysts believe the market is not yet fully factoring in the exchange's new product growth potential and volume-led margin benefits.
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Also read: HDFC Bank unit HDB Financial Services' Rs 12,500 crore IPO opens; GMP at 10%. Should you subscribe?
Over the past year, MCX shares have delivered an impressive 117.28% return. The stock is up 36.27% year-to-date (YTD), while gaining 35% over the last six months. In the past three months alone, the stock has surged 66.11%, and in the most recent one-month period, it has risen 31.96%.
ADVERTISEMENT Around 10:45 am, the shares of MCX were trading 4.6% higher at Rs 8,591.35 on the BSE.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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