MCX Ltd (Q1 FY14)

India Infoline News Service | Mumbai |

In Q1 FY14, MCX posted revenues of Rs1.27bn which was up 3.5% yoy and ahead of our expectation of Rs1.22bn.

CMP Rs695, Target Rs730, Upside 5%
  • In Q1 FY14, MCX posted revenues of Rs1.27bn which was up 3.5% yoy and ahead of our expectation of Rs1.22bn. The stable revenue performance was on the back of a largely stable realisation (Rs1.7 per INR lakh of turnover) and 3% yoy growth in total turnover during the quarter. 


  • The average daily turnover (ADT) for Q1 FY14 showed a marginal up-tick of 1.7% yoy to Rs48.7bn. Amongst the key commodities, Gold and crude oil showed an up-tick growing 15% and 20% yoy in rupee terms respectively. On the flip side, Silver and copper de-grew 25% and 22% yoy in rupee terms. The rest of the commodities (18% of total turnover) grew 44% yoy in rupee terms. MCX continued to maintain its market share leadership by improving market share from 87.2% in Q1 FY13 to 90% in Q1 FY14.


  • The Q1 FY14 OPM performance for MCX came in lower than expected. The operating margin corrected to 53.2% (down 180bps qoq and 830 bps yoy), against our expectation of 54.4%. The correction in margin was driven by higher operating expenses (+41% yoy) and employee costs (+3% yoy). Lower OPM, marginally higher other income (Rs241mn) and increase in effective tax rates resulted in PAT of Rs601mn (versus expectation of Rs613mn).


  • Q1 FY14 was largely unaffected by the increase in CTT on non-agricultural commodities as mandated by the government in its recent regulation. The implementation of the CTT since July 01, 2013 has resulted in the turnover across commodity derivative exchanges to deteriorate by 40-50%. With a large proportion of the turnover at MCX coming from non-agricultural commodities, its turnover too has taken a hit with ADT down to Rs279bn in July 2013 (down 41% yoy). While there has been a structural down tick in volumes, a large part of the same is reflected in the steep price correction seen in the stock (51% in last six months). As the industry settles into the new regime, we believe MCX will continue to lead its peers in the long term growth story of India’s commodity derivatives. Nonetheless in near to medium term we continue to expect sluggishness and hence maintain our MP rating with reduced 9-month TP of Rs730. 

Result table

(Rs mn)
Q1 FY14
Q4 FY13
% qoq
Q1 FY13
% yoy
Net sales
1,273
1,267
0.5
1,230
3.5
Operating profit
677
696
(2.8)
756
(10.5)
OPM (%)
53.2
55.0
(182) bps
61.5
(832) bps
Depreciation
(84)
(84)
(0.8)
(67)
24.5
Other income
241
424
-
233
-
PBT
834
1,036
(19.5)
922
(9.5)
Tax
(233)
(269)
(13.7)
(278)
(16.3)
Effective tax rate (%)
(27.9)
(26.0)
-
(30.2)
-
Adjusted PAT
601
767
(21.6)
644
(6.6)
Adj. PAT margin (%)
39.7
45.3
(559) bps
44.0
(427) bps
Reported PAT
601
767
(21.6)
644
(6.6)
EPS (Rs)
11.8
15.0
(21.5)
12.6
(6.5)
Source: Company, India Infoline Research

Financial Summary
Y/e 31 Mar (Rs m)
FY12
FY13
FY14E
FY15E
Revenues (Rs m)
5,262
5,023
3,443
3,832
BSE 976.25 [2.70] ([0.28]%)
NSE 978.15 [0.45] ([0.05]%)

***Note: This is a NSE Chart

 

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