Shares of Multi Commodity Exchange of India (MCX) are likely to remain in focus after Morgan Stanley upgraded the stock to Equal-weight and sharply raised its target price to ₹11,135 from ₹6,710, citing a sustained surge in transaction revenues driven by heightened commodity price action.
In its note, Morgan Stanley said average daily transaction revenue (ADTR) at MCX has risen meaningfully over the past three months, supported by strong volatility across commodity markets. The brokerage noted that this trend does not appear to be ebbing, prompting a material upgrade to its earnings estimates and valuation assumptions.
Morgan Stanley raised its EPS forecasts by 15% for FY26, 20% for FY27 and 24% for FY28, reflecting stronger-than-expected operating leverage as higher volumes translate directly into profitability. While MCX currently trades at about 50x FY27E EPS and 47.5x FY28E EPS, the brokerage highlighted that valuation could moderate meaningfully if elevated transaction revenues are sustained.
At an assumed ADTR of ₹104 million over FY27–FY28, MCX would trade at roughly 35x P/E, which is only about a 5% premium to its long-term average, according to Morgan Stanley. The brokerage also flagged potential upside risks to estimates if transaction volumes remain volatile for longer than anticipated.
Morgan Stanley added that MCX’s earnings profile remains highly sensitive to commodity price movements and volatility, making the stock an effective proxy for periods of heightened trading activity in the commodity markets.
Disclaimer: The views and target price mentioned are those of the brokerage firm. Investors are advised to consult their investment advisor before taking any investment decisions.
