MCX Share Price Target Raised 66% by Morgan Stanley

Introduction to the Upgrade

Shares of Multi Commodity Exchange of India (MCX) are in focus after global brokerage firm Morgan Stanley upgraded the stock and significantly increased its price target. The brokerage revised its rating on MCX to 'Equalweight' from a previous 'Underweight' stance and hiked the target price by a substantial 66% to ₹11,135 from ₹6,710. This move signals renewed confidence in the commodity exchange's financial prospects, driven by strong operational performance and favorable market conditions. The revised target suggests a modest upside of about 2% from its recent closing price of ₹10,942, but the underlying analysis points to potential for further growth.

Rationale Behind the Bullish Stance

The primary driver for Morgan Stanley's optimistic outlook is the notable surge in MCX's average daily transaction revenue over the past three months. This increase is directly linked to heightened price volatility across key commodities, which encourages more trading activity on the exchange. The brokerage noted that this momentum does not appear to be fading, suggesting a sustained period of elevated transaction volumes. This operational strength prompted a material revision of earnings estimates, with the brokerage flagging potential upside risks if the high transaction volumes are maintained.

Revised Earnings and Valuation Forecasts

Reflecting its positive outlook, Morgan Stanley has increased its earnings per share (EPS) forecasts for MCX for the upcoming fiscal years. The estimates have been raised by 15% for FY26, 20% for FY27, and a significant 24% for FY28. At its current price, MCX trades at approximately 50 times its estimated FY27 earnings and 47.5 times its estimated FY28 earnings. However, the brokerage presented a scenario where if the average daily transaction revenue sustains at ₹104 million through FY27-FY28, the stock's valuation could become more attractive, trading at around 35 times earnings. This would represent a 5% premium to its long-term average valuation, indicating room for appreciation.

Stock Performance and Market Context

MCX has delivered a strong performance for its investors over the past year, with its share price surging by nearly 76%. The stock closed the previous session with a marginal gain at ₹10,942. The upgrade from a prominent firm like Morgan Stanley is expected to act as a positive catalyst, potentially drawing more investor interest. The broader analyst community holds a mixed but generally positive view on the stock. Among 12 analysts tracking MCX, six have issued a 'Buy' rating, five recommend a 'Hold', and only one has a 'Sell' call.

Broader Industry Trends and Company Health

Other financial institutions share a similar positive sentiment. UBS, for instance, recently reiterated its 'Buy' rating and raised its target price for MCX to ₹12,000, citing strong October earnings driven by bullion price volatility and new product introductions. The company's recent financial results support this optimism. For the second quarter of FY26, MCX reported a 28.54% year-on-year growth in Profit After Tax (PAT), which stood at ₹197.47 crore. The Average Daily Turnover (ADT) of futures and options saw an impressive 87% YoY jump to ₹4,11,270 crore, largely driven by the bullion segment.

Future Outlook and Growth Drivers

The outlook for MCX remains constructive, heavily dependent on the continuation of volatility in commodity markets, particularly in precious metals and energy. The exchange's strategic initiatives, including the launch of new products like monthly options on the BULLDEX index and smaller contracts for gold and silver, are designed to attract a wider range of market participants and boost trading volumes. The key factor for investors to monitor will be the sustainability of the high transaction revenues. If these levels persist, MCX is well-positioned for significant earnings growth and a potential re-rating of its stock.

Conclusion

Morgan Stanley's significant 66% target price hike for MCX underscores the exchange's robust operational performance amid favorable market dynamics. The upgrade is founded on a sustained surge in transaction revenues fueled by commodity price volatility. With upwardly revised earnings forecasts and strong recent financial performance, MCX appears to be on a solid growth trajectory. While the immediate upside to the new target is limited, the potential for sustained high trading volumes presents a compelling case for long-term value creation.