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.

Comments

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

    ReplyDelete
  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)

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

    ReplyDelete
  4. Any risks or negatives about this ipo?

    ReplyDelete
  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%

    ReplyDelete
  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.

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

    ReplyDelete

Post a Comment

Popular Posts

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.

Moneycontrol Terminal - Streaming Live Quotes

Moneycontrol has introduced a new feature Moneycontrol Terminal - an enhanced version of real time price updates. Though there were live quotes provided by the website previously, the present form  gives a better update of live quotes of indices and stocks.

This terminal provides live streaming quotes for both NSE and BSE free. It also provides quotes for most of the indices and also the constituents/stocks of the indices in BSE and NSE.  The terminal also provides live news and other market news, which might be useful for traders. The hardware recommended is minimum of 1 GB RAM.

It would be better if stock of any choice could be added ( market watch of a set of stocks ), which would be easier to track one's trading positions. Anyway, this is a better alternative for people who don't have access to any trading software, to view live action of the markets.




You could just try the same here at Moneycontrol Terminal


NSE Level 3 Data

Before we get into details of NSE Level 3 Data, it is important to first understand the basic operations of the stock market.  All publicly traded equities have a bid price and an ask price when they are bought and sold. The bid is the highest price a trader( or an investor) is willing to purchase a stock. The ask is the lowest price in which he is willing to sell a stock.


Depth of the Market(DOM):Looking at a Level 1, Level 2 or Level 3 quotes can give a trader, a basic idea of how a stock is performing at any given time.

Level 1 Market Data provides the basic market data which includes Bid price, Bid size, Ask price and Ask size.

Level 2 Market Data provides more information than Level I data. Mainly, it doesn't just show the highest bid and offer, but also shows bids and offers at other prices. Now level 2 provides market depth data upto 5 best bid and ask prices.

Level 3 Market Data provides market depth data upto 20 best bid and ask prices .  This primarily used by brokers and ma…