The revised target implies a potential upside of around 28% from Wednesday’s closing price.
UBS said the outlook for MCX has improved on the back of positive regulatory developments, resilient trading volumes and continued support from elevated commodity price volatility.
The brokerage said MCX’s Q1FY27 performance showed strong growth, while management remained positive on the outlook. It also sees the stock’s valuation as attractive at around 40 times one-year forward price-to-earnings, representing a 15% discount to its three-year average.
UBS sees scope for a re-rating following the Securities and Exchange Board of India’s (SEBI) consultation paper on expanding foreign portfolio investor (FPI) participation in exchange-traded commodity derivatives.
The brokerage has raised its EPS estimates for FY27, FY28 and FY29 by 4%, 8% and 9%, respectively.
MCX shares had gained on Wednesday after SEBI proposed widening the scope for FPI participation in non-agricultural index derivatives, including non-cash-settled contracts and other non-cash-settled non-agricultural commodities.
At present, FPI participation is largely restricted to cash-settled commodity derivative contracts and does not extend to physically settled contracts.
JPMorgan had earlier upgraded MCX to ‘Overweight’ and raised its price target to ₹3,500 from ₹3,000.
The brokerage raised its target valuation multiple to 45 times from 35 times, viewing the proposed regulatory changes as a structural volume catalyst for MCX, with bullion likely to be the biggest beneficiary.
JPMorgan expects incremental FPI participation to support trading volumes, with its estimates pointing to a 9.1% and 14% increase in FY28 and FY29 futures average daily traded value (ADTV), respectively. Options average daily premium turnover (ADPTV) is expected to rise 4.5% and 10% over the same period.
Jefferies has a ‘Buy’ rating on MCX with a price target of ₹3,600. The brokerage estimates that FPI participation currently accounts for around 5-6% of cash-settled commodity futures and options trading.
Similar participation in non-cash-settled, non-agricultural contracts could potentially add around 3% to MCX’s profit after tax, it said.
Jefferies also sees further upside from deeper participation in commodity index options such as Bulldex and Metldex. While these contracts currently have negligible volumes, they could potentially contribute around 10% to MCX’s PAT if they reach 10% of monthly equity average daily turnover over the next three years, according to the brokerage.
