Skip to main content

MCX IPO Review

 master and student
MCX or Multi Commodity Exchange of India, the country's largest commodity exchange, is coming out with an IPO of 6 million shares of Rs.10 each in the price band of Rs.860-1032 next week.
After long period of time, an IPO of this size and stature has hit the market, which is unique of its own. This is the first ever IPO by an exchange in the country and the issue has been given highest grade of 5/5 by the rating agency Crisil.

Issue Detail:
Issue Open: Feb 22 - Feb 24, 2012.
Issue Size: 6,427,378 Equity Shares of Rs. 10.
Issue Price: Rs.860-Rs.1032.
Listing At: BSE, NSE.

The promoter of the company is Financial Technologies, which is a leader in offering trading solutions like ODIN and other similar products. Globally, MCX is the fifth largest commodity exchange, which holds top two positions in gold and silver segments and  higher positions in other commodities as well.

The EPS for the reported year 2011 stands at Rs.34.5 and the book value at Rs.210.  The company had recorded Rs 447.5 crore of total income and net profit of Rs 176.2 crore with an equity capital of about Rs 38 crores for the year March 31, 2011. Considering the current growth of about 70-75%, the current year EPS would be around Rs.60 and at the lower price band of Rs.860, the issue is done at 15 times earnings and at the upper end of the band at Rs. 1,032, valuation per share works out at a PE of about 18 times.

Though the pricing seems on the higher side, considering the huge growth potential, the issue price is justified. Hence investors with long term view can invest in MCX IPO  and not for listing gains alone. Once this issue is gone through, one could expect couple of similar IPOs from BSE and NSE also.

Watch out this space for more such IPOs and as well as about the big one from the international front, which is the Facebook IPO.


  1. The issue could have been priced still lower. The Price to book value is more than 3 times.

  2. Though the pricing is bit on the higher side, huge growth rate justifies it. The grey market premium indicating good response (Rs.150-200)

  3. MCX will be listed on BSE only on NSE.

  4. Any risks or negatives about this ipo?

  5. Yes, listing only on BSE.

    Regarding key risks, any ban on Agri commodities by the regulator will be the one. This is unlikely to happen, may be one or two commodities could be banned, but not the whole lot.
    Competition could arise in the form of NCDEX, which is at present has the market share of about just 50-10%

  6. Negatives/Risks: also likely introduction of ctt(commodities transaction tax) in upcoming budget(similar to stt) which will lead to reduction in trading volumes.
    The main reason for spurt in volumes traded in MCX was increase in prices of gold/silver. Any volatility or change in those prices can severely affect trading volumes.

  7. @ Roshni Bhatia, yes CTT could slow things a bit, if it is introduced in the current budget session.


Post a Comment

Popular posts from this blog

Your Bill Amounts Are Going To Increase From June 1, 2016

Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act, 1994. Union Finance Minister, Arun Jaitley, in his budget announcements proposed to impose a cess, called the Krishi Kalyan Cess, @ 0.5% on all taxable services. The present rate of service tax will be hiked to 15 per cent from June 1, 2016, from 14.5 per cent. Take a look at what gets expensive:

Phone Bills: Your phone bills are going to go up. So, pay a good 15 per cent now on service tax on phone bills.

Restaurant Bills :If you are dining in a restaurant that already has service tax applicable, you are going to pay more on your eating out. Though 0.5 per cent on a single bill may not mean much, frequent diners may end-up paying a lot during the year.

Travelling: You will have to pay more for air travel, as there is a service tax on tour operators and travel agents.

What is Gold ETF - Gold Bees, Reliance Gold,Kotak Gold

What is Gold Bees or Gold ETF?

Gold ETFs are open-ended mutual fund schemes that will invest the money collected from investors in standard gold bullion (0.995 purity). The investors' holding will be denoted in units, which will be listed on a stock exchange.They provide returns that would closely track the returns from physical gold in the spot market.

An investor can buy and redeem the units either directly from the mutual fund or from the stock exchange.Presently there are many Gold ETFs traded in NSE India. Some of the listed Gold ETFs are GoldBees,Reliance Gold,Kotak Gold,UTI Goldshare

Why choose Gold?
Gold holds its own in any investment evaluation on its strengths as a hedge against inflation, value in the event of political uncertainties and its traditionally negative co-relation with other asset classes such as stocks, fixed income securities and commodities.

The value of goods and services that gold can buy has remained stable unlike currencies that have seen significant…


NIFTY BEES - is the first ETF (Exchange Traded Fund) in India, which seeks to provide investment returns that closely correspond to the total returns of securities as represented by the S&P CNX Nifty Index. It gives you the most diversified exposure at lowest possible unit size. Approximately value of Nifty bees will be 1/10th value of the prevailing Nifty price.

ETFs are one of the latest financial innovations and any new concept takes time to be known widely. Globally it took more then five to seven years before it could be of any significant size. In India, it was introduced with Rs 21 crore in size , a fraction of the mutual fund industry, it has come far with more than Rs 700 crore in size with six ETFs.

The Nifty BeES also scores over other index funds due to its low tracking error and expense ratio, apart from easier tradeability as it is listed in the NSE. One can also consider doing an SIP in Nifty BeES.

Some of the reasons to invest in Nifty Bees : Investing in Exchange …