Multi-Commodity Exchange of India (MCX) share price is in focus after it reported a strong March quarter performance. The share price has rallied a whopping 164% in the last one year but Motilal Oswal sees downside risk going forward.
The brokerage house maintained its ‘Neutral’ rating on the stock. The brokerage set a target price of Rs 2,850, indicating nearly 11% downside from current levels. According to Motilal Oswal, growth during the quarter came largely from bullion and energy contracts, even as trading activity cooled sequentially after extreme volatility in precious metals.
Motilal Oswal on MCX
MCX Q4 revenue rose to Rs 888.9 crore compared to Rs 291.3 crore a year ago. Profit after tax increased to Rs 529.8 crore in Q4 from Rs 135.5 crore during the same period last year. Operating revenue rose 205% year on year and 34% quarter on quarter
The brokerage said bullion and energy contracts continued to support business growth, though momentum cooled from the previous quarter after bullion turnover eased. Average daily turnover declined 11% quarter on quarter to Rs 426 lakh crore after bullion contracts dropped 26% during the same period.
That said, Motilal Oswal also reduced its earnings estimates for FY27 and FY28 after factoring in softer trading volumes and higher operating expenses. The brokerage expects revenue, earnings before interest, taxes, depreciation and amortisation, and profit after tax to post compound annual growth of 16%, 15% and 17% respectively between FY26 and FY28.
Motilal Oswal said options turnover still remained healthy despite moderation in bullion activity. Futures activity also posted strong expansion. Futures average daily turnover rose to Rs 90,200 crore from Rs 27,300 crore a year earlier, supported by growth in bullion, energy, base metal, agricultural and index contracts.
“MCX continues to strengthen its product pipeline across metals, energy, and commodity indices, with focus on commodity index futures alongside options,” Motilal Oswal said in its report.
The brokerage also noted that MCX retained more than 99% market share in commodity futures during the quarter. Gold and silver together contributed nearly 77% of futures turnover.
MCX sees participation growth
Motilal Oswal said participation levels remained healthy as more traders entered the platform through digital onboarding channels. The brokerage pointed out that the number of unique client codes rose to 4.65 crore in the March quarter of FY26 from 2.48 crore in the corresponding quarter last year.
According to the brokerage, traded clients reached 14 lakh, while member participation rose 7% year on year to 583 members by the end of March 2026.
The report said digital brokers played a major role in expanding the user base. Better user experience and technology integration also supported the rise in account openings.
“This growth was driven by improved onboarding through digital brokers, better user experience, and integration improvements such as consolidated ledger systems,” Motilal Oswal said.
Foreign portfolio investor participation also remained stable. Motilal Oswal said foreign portfolio investors currently contribute around 2% to 3% of overall MCX average daily turnover, while their contribution within the energy segment runs in double digits.
The brokerage added that onboarding momentum remained healthy and a future pipeline of participants continued to build.
MCX: Q4 costs and margins in focus
Motilal Oswal said operating expenses for MCX increased sharply during the quarter as business activity expanded. Total expenses rose to Rs 223 crore from Rs 131.2 crore in the same quarter last year and Rs 170.4 crore in the December quarter.
Other expenses climbed 108% year on year to Rs 176.8 crore. Staff costs remained almost unchanged at Rs 46.1 crore compared with Rs 46.3 crore in the year ago period.
The brokerage said higher spending on technology infrastructure and settlement guarantee fund contribution added pressure on costs during the quarter. Computer technology costs increased 128% year on year, while contribution to the settlement guarantee fund rose 214%.
Despite the rise in expenses, operating profitability remained strong. Earnings before interest, taxes, depreciation and amortisation rose to Rs 666.1 crore from Rs 160.2 crore a year earlier. Margin improved to 74.9% from 55% during the same period.
“SGF contribution remained elevated in line with strong business growth, while the overall Settlement Guarantee Fund position stayed comfortable,” Motilal Oswal said.
Profit after tax increased to Rs 529.8 crore from Rs 135.5 crore in the March quarter of FY25. For the full year, net profit climbed to Rs 1,331.6 crore from Rs 560 crore.
Motilal Oswal on future business drivers for MCX
Motilal Oswal said MCX continues to work on new products and exchange initiatives that may support activity over the next few years. The brokerage noted that electricity derivatives are seeing healthy traction and the exchange has already received approval to establish a coal exchange subsidiary.
The report added that MCX is also waiting for regulatory direction regarding agricultural commodities.
The brokerage said management remains operationally prepared for co location services once approval arrives from regulators.
“MCX is operationally prepared to launch co-location services quickly if regulatory approval is granted,” Motilal Oswal said.
At the same time, the brokerage pointed to one near term concern linked to the Reserve Bank of India’s proposed lending norms for proprietary traders. According to the report, tighter funding access may affect some trading members.
“The RBI’s proposed lending norms for prop traders may create some near-term impact on select trading members through tighter credit availability,” Motilal Oswal said.
The brokerage also expects commodity trading volumes to settle at more normal levels after the unusually strong activity seen during FY26.
MCX valuation
Motilal Oswal reduced its earnings estimates by 6% for FY27 and 4% for FY28. The brokerage said the revision takes into account present trading trends and rising costs.
According to the Motilal Oswal report, MCX futures volumes may decline 10% in FY27, even though options turnover may continue to post strong growth.
“Bullion and energy drove incremental volume growth in FY26; however, elevated bullion volatility led to a sequential moderation from peak levels in 4Q,” Motilal Oswal said.
The brokerage retained its Neutral rating with a one-year target price of Rs 2,850 based on 40 times estimated earnings for FY28.
MCX shares have delivered a massive run over the past year, and Motilal Oswal believes much of the optimism now stands priced into the stock despite healthy business growth and expanding participation trends across commodity markets.
Conclusion
Motilal Oswal said MCX closed FY26 with strong earnings growth, rising participation and expanding commodity activity across bullion, energy and options contracts. The brokerage also acknowledged the exchange’s push into newer products and services, including electricity derivatives and coal exchange operations.
Even so, the firm retained a cautious stance after the sharp rise in the stock price and softer trading activity seen during the latest quarter.
Disclaimer: Investments in the securities market are subject to market risks; please read all related documents carefully before investing. The analysis and price targets mentioned are based on brokerage reports and do not constitute a direct recommendation to buy, sell, or hold any security. Investors should consult with a SEBI-registered investment advisor to assess the suitability of any investment based on their individual risk profile and financial goals.
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