28-Nov-2023
2 mins read
The Multi Commodity Exchange of India (MCX) has been making headlines with a remarkable 112% surge in its share price, doubling investors’ money over the course of this year. The stock, demonstrating multibagger returns, reached a fresh 52-week high of Rs 3,169.55 on the National Stock Exchange (NSE) on November 28, registering a notable 6% increase.
Factors Driving MCX’s Phenomenal Growth
- Technology Cost Recovery Decision: The recent upswing in MCX’s share price follows the company’s announcement regarding its decision to recover technology costs for the old platform from its subsidiary, Multi Commodity Exchange Clearing Corporation Ltd (MCXCCL). The board’s resolution involves the recovery of technology costs for the old platform from MCXCCL until October 15, 2023, based on a “pay-for-use basis” as per the existing Resource Sharing Agreement.
- Financial Responsibility and Strategic Moves: MCX will bear the remaining expenditure, approximately Rs 35 crore, on the old platform from October 16, 2023, to December 31, 2023. In addition, MCXCCL stands to receive up to Rs 25 crore in unsecured loans or inter-corporate deposits, subject to regulatory approvals, to meet operational needs. This strategic move indicates MCX’s commitment to financial prudence and flexibility.
- Operational Update: The technology cost-sharing model between the parent company (MCX) and its subsidiary (MCXCCL) has been in effect since the commencement of MCXCCL’s operations. With the transition to a new technology platform on October 16, the cost-sharing arrangements are being finalized in accordance with transfer pricing norms, pending confirmation from statutory auditors.
Financial Highlights and Market Outperformance
In the quarter ending September 30, MCX showcased a notable financial trajectory, narrowing its net loss to Rs 19.07 crore from Rs 63.3 crore in the previous year. Simultaneously, the company witnessed a 30% surge in revenue, reaching Rs 165.11 crore. Notably, in 2023, MCX delivered remarkable returns, soaring over 112%, effectively doubling investors’ money and outperforming the Nifty 50, which rallied at 8.7% during the same period.
While the company continues to navigate operational decisions and cost-sharing dynamics, its recent market performance signifies significant investor interest and confidence in its strategic moves and financial trajectory. In today’s trading session, MCX shares closed at Rs 3,135 on the NSE.
In conclusion, MCX’s surge to a fresh 52-week high and its outstanding performance in 2023 signify a dynamic outlook for the company. The strategic decisions regarding technology cost recovery, coupled with robust financial results, position MCX as a key player in the market.