In early trading on April 24, shares of the commodity exchange Multi Commodity Exchange of India (MCX) took a significant hit, plummeting over 7 percent. This decline followed the release of the company’s financial results for the quarter ended March 2024, which, while showing positivity, fell short of market expectations.

After experiencing losses in the previous two quarters, MCX managed to achieve a net profit of Rs 87.8 crore in Q4, marking a substantial improvement. Additionally, the company reported a 35 percent year-on-year increase in revenue to Rs 181.1 crore. Despite these gains, the figures failed to meet analysts’ estimates.

The MCX board announced a final dividend of Rs 7.64 per equity share for the fiscal year 2024. According to regulatory filings, the company’s operating income for the quarter surged 35.43 percent year-on-year to Rs 181.14 crore. However, it saw a sequential decline of 5.42 percent.

Remarkably, MCX witnessed a sharp expansion in margins, soaring to 56.3 percent compared to a mere 1.6 percent in the corresponding period of the previous fiscal year.

Investment banking giant Morgan Stanley maintained its ‘underweight’ rating on MCX stock with a target price of Rs 2,085, suggesting a downside potential of approximately 48 percent. The firm expressed concerns over MCX’s failure to meet Q4 net profit estimates and consensus expectations, along with lower-than-expected operating revenue.

Moreover, MCX’s costs exceeded estimates, further dampening investor sentiment. The brokerage anticipates gaining further insights during the analyst call, particularly regarding the breakdown of operating revenue and recurring costs.

At 9:53 am, MCX shares were trading at Rs 3,749.55 on the National Stock Exchange, marking a 6.9 percent decline from the previous close. Despite this setback, the stock has demonstrated remarkable performance over the past year, surging by 155 percent, significantly outpacing the benchmark Nifty 50, which rose by 26 percent during the same period.

Earlier this month, leading financial services firm Motilal Oswal upgraded its rating on MCX to a ‘buy,’ setting a target price of Rs 4,300 per share. The decision was influenced by MCX’s strategic initiatives aimed at expanding volumes through the introduction of new products such as Steel Bar, Gold Serial contracts, and Power contracts.

Analysts anticipate a potential surge in volumes, particularly in the bullion segment, with the introduction of smaller contracts and weekly expiry products. Additionally, MCX’s plan to launch power future contracts, subject to regulatory approvals, is expected to tap into a market segment currently untapped.

Motilal Oswal’s report emphasized the significant potential for MCX in the power contracts market, particularly with growing interest from private companies seeking to sell surplus captive power generation. The firm suggested that regulatory measures could further bolster participation in MCX’s offerings.

As MCX navigates the aftermath of its Q4 results, investors remain vigilant, eagerly awaiting further developments and regulatory approvals that could shape the company’s trajectory in the coming quarters.