MCX IPO is the first exchange to list on Indian Bourses, one of the most awaited IPO. It is the fifth largest exchange in the world. MCX is the biggest silver exchange in the world. The company is offering 64 lacs shares on sale at a price band of Rs 860 to Rs 1032 per share. The company is planning to raise Rs 663 crores at the upper band. Crisil has rated the MCX IPO grade 5.

The exchange is known for its innovative products. It introduced  indices for various sectors such as MCX Agri, MCXEnergy and MCXMetal. It was also the first exchange in India to offer trading in crude oil, steel and almonds.

The earning drivers for MCX are

  • Transaction fees
  • Membership admission fees
  • Annual subscription fees
  • Terminal charges

The company earns more than 50% of its revenue from transaction fees which in turn depends on the futures contracts traded on the exchange.

Risk for the company is that the government may impose a commodity transaction taxes like Securities transaction tax in future which may reduce its margins.

Overall the IPO is attractive and we expect the stock to trade 15-20% above its issue price, at least because of the scarcity of peers in the market.