Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Thursday 23 February 2012

MCX IPO

Like what the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are for equities, MCX or Multi Commodity Exchange of India is synonymous in the commodities trading space with over 87 per cent market share in the country. However, unlike equities, the potential for commodities trading is high, given the low penetration — which is why the growth prospects of companies like MCX looks promising. That apart, given the cash in the books — besides a healthy business model — makes the offer attractive from a long-term perspective.

Cash cow

Typically, once an exchange and related infrastructure is set up, it starts generating revenues in the form of transaction fees among others with minimal need for capital (or increase in operating costs) even as the business scales up.

MCX, which is in the nascent stage and generating healthy cash, has been paying back almost a third of its profits to the shareholders in the form of dividends. Despite this, it is sitting on ~700 crore of cash and equivalent, which is fairly large for a company with a networth of ~1,100 crore. Globally too, exchanges generate high cash and return on equity (20.5 per cent in the case of MCX) and hence pay huge dividends like in the case of Hong Kong Exchange, which distributes almost 8090 per cent of its profits in the form of dividends.

Annuity business

Not surprisingly, investors thus see exchanges as more of an annuity investment or from a dividend yielding stock. This is also a reason that globally exchanges trade at an average 5 times their book value and 18-20 times earnings.

In the case of MCX, at the upper price band of ~8601,032, its shares are valued at 4.3 times annualised book value and 21 times annualised earnings, which looks fair, considering its business model, leadership and size of growth opportunity relative to its global peers, cash in the books and return profile. Also, some of MCX's investments in other exchanges like MCX-SX, SME and MCX-CCL are in the nascent stage and could add value in future.

Growth strategy

MCX started its operation in 2003. Since then, its revenue and trading volumes have grown strongly. Though competition has also increased and there has been a key risk, the company still enjoys a leadership position on the back of its first mover advantage and technological support provided by its promoter company, Financial Technologies. The company continues to focus on increasing the number of members and terminals through geographical and product expansion. It already has 2,153 members, a total which is almost equal to the trading members in the equity segment of BSE and NSE put together.

So, while there may not be an exponential growth in members, future growth is likely to come from increase in trading terminals and clients. For instance, for the nine months to December 2011, while the company has added 34 new members, the terminal base has expanded by almost 100,000 to 296,896, which should reflect in higher trading volumes for the company.

Besides, the government has yet to pass a bill to amend the Forwards Contracts (Regulation) Act. Once the regulatory changes are in place, trading in options and indices are expected to drive the volumes on the exchange in line with the global trend," said a note on the company by CRISIL, which has given the highest grading to the IPO. Globally, it is considered that options and indices (like Nifty in equity) account for a large chunk of volumes, which is yet to happen in India. To support this, the company has already developed the products and software. That apart, the rating agency also said that the government also been considering allowing foreign and domestic institutions and banks to participate in commodity futures trading. The entry of such participants, whenever permitted, is likely to be a positive for commodity exchanges like MCX, as it would help improve market liquidity. However, any delays (or rejection) of these proposals would lower growth expectation and thus, hurt stock valuations of MCX.
 

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. HDFC TaxSaver
  2. ICICI Prudential Tax Plan
  3. DSP BlackRock Tax Saver Fund
  4. Birla Sun Life Tax Relief '96
  5. Reliance Tax Saver (ELSS) Fund
  6. IDFC Tax Advantage (ELSS) Fund
  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

 

Submit filled up application    Collection canter near you

 

 

 

------------------------------------------------
How to apply to REC Bonds?

Apply for REC Tax Free Bonds forms below

Download REC Tax Free Bond Application Forms

Submit the filled up form to Collection canter near you

 

 

 

No comments:

Post a Comment

Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Popular Posts