Home Commodities Icici Securities Sees Strong 40% Upside In This Commodity Exchange Stock

Icici Securities Sees Strong 40% Upside In This Commodity Exchange Stock

MCX share is one of the dividend paying stocks as it has announced final dividend of 174 per cent in FY2021-22.

Stock to buy today: Multi Commodity Exchange or MCX share price has remained under consolidation phase for around a year. In last one year, MCX shares have dipped around 21 per cent whereas in 2022, it has tumbled by almost same percentage. It is one of the dividend paying stocks as MCX has announced final dividend of 174 per cent and ICICI Securities is expecting this stock to come out of the consolidation phase. ICICI Securities believes that MCX share price may go up to 1,715 apiece levels, delivering around 40 per cent upside in long term.

Pointing towards positives in Q4FY22 results, ICICI Securities research report says, “MCX has reported strong Q4FY22 result with EBITDA of 500mn vs Rs1.6bn for FY22. We expect the company to clock PAT CAGR of 30% between FY22-24 driven by (1) growth in options and (2) cost savings with setting up of new software platform with TCS. Our estimates factor in overall ADTV (futures + options) of Rs550/600bn in FY23/FY24 which has already grown from Rs342bn in FY22 to Rs459bn in FY23-TD (data up to 16th May’22). We factor in total software-related cost and additional depreciation of Rs300mn in FY24 vs Rs600mn run-rate as seen in FY18-21. We believe both these estimates are conservative.”

On its suggestion to position investors in regard to MCX shares, ICICI Securities says, “We upgrade the stock to BUY from Add with a revised target price of 1,715 (earlier: 1,650) based on 35x FY24E core EPS (rolled over from FY23/24E) of 43.6 and free cash of Rs181 per share.”

MCX has recently announced 174 per cent final dividend in FY22. MCX informed Indian exchanges about the recommendation of its Board of Directors citing, “Pursuant to Regulation 33 read with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please be informed that the Board of Directors of the Company at its Meeting held today, inter-alia, has recommended a final dividend of 17.40/- per equity share (face value of Rs.10/- each) for the Financial Year ended March 31, 2022, subject to deduction of tax at source and the approval of the shareholders in the ensuing Annual General Meeting. The date of Annual General Meeting, the record date to determine the eligibility of shareholders for payment of dividend and the date of payment/dispatch of dividend shall be intimated subsequently.”

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