IPO ANALYSIS: MULTI COMMODITY EXCHANGE OF INDIA (MCX): BRIGHT PROSPECTS - INVEST

PRICE BAND Rs 860 to Rs 1,032.

ISSUE DETAILS:

ISSUE SIZE / FV	64,27,378 SHARES / RS10
IPO OPEN / CLOSE	22-02-12 /24-02-12
BRLMS	EDELWEISS, MORGAN STANLEY AND CITI CORP
REGISTRARS	KARVY
IPO GRADE	5 / 5 BY CRISIL

IPO - OFFER FOR SALE - DETAILS OF OFFERORS

(NO OF SHARES)

FTIL	26,43,916
SBI	21,12,025
GLG	7,81,508
ALEXNADERIA	3,90,754
CORP BANK	2,46,175
ICICI LOMBARD	1,48,000
BOB	1,05,000
TOTAL	64,27,378 SHARES

OBJECTS OF THE OFFER

The objects of the Offer are to achieve the benefits of listing on the exchanges and to carry out the sale.

The listing of the Equity Shares will enhance the brand name and provide liquidity to the existing shareholders.

The Company will not receive any proceeds from the Offer.

ABOUT MCX

It is promoted by FTIL with a pre-IPO stake of 31.18%. FTIL is a Software developer and a technical service provider of automated electronic solutions for foreign exchange, commodities and equities.

MCX’s leadership position in the Indian commodity futures market over the past four years, with over 80% share of the overall traded turnover in FY11. It is a leader in the trading of bullion, crude oil, copper and natural gas.

The total value of commodity futures contracts traded on the Exchange in the nine months ended December 31, 2011 and the fiscals 2011, 2010 and 2009 was Rs 119,806.89 billion, Rs 98,415.03 billion, Rs 63,933.03 billion and Rs 45,880.95 billion, respectively. According to data maintained by the FMC, these amounts represented 87.3%, 82.4%, 82.3% and 87.4% of the Indian commodity futures industry in terms of the value of commodity futures contracts traded during the same periods.

As of December 31, 2011, MCX, offered trading in 49 commodity futures based on contract specifications, from a diverse range of classes including bullion, ferrous and non-ferrous metals, energy and agriculture. The same underlying physical asset traded under different contract specifications is regarded as a separate commodity future.

MCX as has around 2,200 members on the Exchange‘s platform, with over 296,000 terminals.

MCX is the largest silver exchange, the second largest gold, copper and natural gas exchange and the third largest crude oil exchange, in terms of the number of commodity futures contracts traded for each of these commodities.

FINANCIALS (RS IN MILLIONS)

YEAR	31-03-09	31-03-10	31-03-11	31-12-11 (9 MONTHS)
INCOME	2,124.48	2,873.82	3,688.92	4,023.33
NET PROFIT AFTER TAX	1,574.19	2,207.26	1,730.97	2,205.34
CAPITAL	407.96	407.99	509.99	509.99
EPS	31.60	43.30	34.56	58.00#
NET WORTH	4,936.50	6,968.12	8,488.49	10,739.25

# Annualized.

VALUATION AND RECOMMENDATIONS:

The offer for sale of 64.27 lac shares of Rs 10 each constitutes 12.6% of the paid up capital of Rs 50.99 CR. MCX, in the price band of Rs 860- 1032 is valued around 17 times its FY12 earnings and 5 times its NAV. This compares well with its counterparts, the US based CME and ICE. Shares are being listed only on BSE is a negative factor. The company has had negative cash flow in the previous years.

Considering small size of the offer, there will be listing gains. INVEST.