Last Updated : 21 June 2012 at 17:10 IST
India's MCX becomes 3rd largest commodity futures exchange
India's only listed commodity exchange, Multi Commodity Exchange (MCX) said it became world's third biggest commodity futures exchange in 2011 in terms of volume of contracts.
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MUMBAI(Commodity Online): India's only listed commodity exchange, Multi Commodity Exchange (MCX) said it became world's third biggest commodity futures exchange in 2011 in terms of volume of contracts.
It was ranked 6th in 2010 and has overtaken Europe's Intercontinental Exchange and China's Shanghai Futures Exchange and Dalian Commodity Exchange.
MCX mentioned its volumes jumped 75.5% to 346.2 million contracts in 2011, while the volumes of CME group, which includes CME, CBOT and NYMEX, grew 11.2% to 677.2 million contracts to take the first position. Zhengzhou Commodity Exchange in China was second with 406.4 million contracts trading in 2011.
Commenced in 2003, MCX follows the principle of demutualisation under which the ownership, management and membership of an exchange reside in different hands to ensure maximum transparency.
MCX currently allows trading in 49 commodity futures from bullion, metals, energy and agriculture. Its unlisted peers in India include NCDEX, Indian Commodity Exchange (ICEX), National Spot Exchange, Ace Derivatives and Commodity Exchange, NMCE, Indian Energy Exchange (IEX) etc.
MCX commands the biggest 82% market share in India by commodity future value. Similarly, it has world's highest turnover in gold and silver contracts, second largest in natural gas and third largest in crude oil.
The average daily turnover at MCX has been growing fast. The turnover, which currently stands around Rs 51,400 crore, has grown over 3.5 times in last three years. India currently doesn't allow trading in commodity options or indices. Similarly, FIIs, Mutual Funds and Banks are not allowed to trade in India's commodity futures markets. Any regulatory changes in this regard would substantially boost traded volumes on MCX.
The company's business is high cash-generating, low-capex and is debt-free. Since the company cannot invest in unrelated businesses it will ultimately become a high dividend paying company.
MCX is currently trading at a price-to-earnings ratio (P/E) of 18.1 and a price-to-book-value (P/BV) ratio of 5.2. Its Enterprise Value (EV) is 6.8 times its revenues and 10.7 times its EBIDTA.
On all these valuation parameters it is at par to the valuation of Intercontinental Exchange, at a premium toLondon Stock Exchange, but at a discount to Hong Kong Stock Exchange. Considering the dominant domestic position and emerging nature of Indian economy, current valuation of MCX appears justified.
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