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Structural growth levers broaden the earnings opportunity

* MCX is emerging as a clear structural beneficiary of India’s deepening commodity derivatives ecosystem: F&O ADT reached ~INR10.5t in 1QFY27, with options notional ADT rising 266% YoY and futures ADT rising 47% YoY, reflecting strong underlying market expansion alongside continued volatility support.

* The addressable market is expanding on both sides of the participation spectrum: traded clients increased 95% YoY to 1.4m in 1QFY27, while ~220 FPIs are now active on MCX (~35 added in 1Q), with FPIs contributing only ~2.5% of ADT. Proposed regulatory easing around FPI access, position limits, and potential colocation provides meaningful institutional whitespace alongside continued retail penetration.

* Bullion is becoming a deeper and more monetizable ecosystem, rather than simply a high-volume product: gold options ADV reached ~300t and silver ~9,400t, while 50+ AMCs use MCX bullion prices for AUM calculations, strengthening MCX’s benchmark relevance and ecosystem positioning.

* Volume diversification is gaining traction, creating incremental optionality beyond the core bullion complex: electricity futures reached ~INR370m ADT in 1QFY27, with ~55% ADT share and >70% OI share, while Silver 100g, crude sunflower oil, and the proposed Coal Exchange investment further broaden the product opportunity. These initiatives provide longer-term, second-order growth drivers as the core contracts mature.

* We have raised our FY27/FY28 earnings estimates by 11%/19% to reflect the current run rate of options and futures volumes. We expect revenue/EBITDA/PAT to register a robust CAGR of 25%/26%/27%, respectively, over FY26-28. We reiterate our Neutral rating on the stock with a one-year TP of INR 3,500, implying a valuation of 42x FY28E EPS.

Regulatory tailwinds: Policy support is widening addressable market

* FPI access could be a structural catalyst: SEBI’s Aug’26 consultation paper proposes widening FPI participation to non-agricultural index derivatives and physically settled non-agricultural commodity contracts, materially expanding the institutional addressable market. FPIs currently contribute ~2.5% of MCX ADT, with ~220 FPIs active (+35 in 1QFY27), leaving significant headroom for further participation.

* Higher position limits could deepen institutional participation: SEBI’s May’26 consultation paper proposes doubling client-level limits for agricultural commodity derivatives to 2%/1%/0.5% across broad/narrow/sensitive categories; the proposed shift from an “AND” to an “OR” test for broad-category classification could also expand the set of contracts eligible for higher limits. * Colocation remains a potential institutional-flow trigger: Colocation is currently not permitted for commodity exchanges. As and when the regulations allow the same, MCX should build the same in a short span.

* Capital-efficiency measures should support participation economics: SEBI’s Mar’26 circular revising SGF coverage and Jun’26 circular clarifying early-pay-in benefits for the commodity derivatives segment should improve capital efficiency for eligible participants.

* Physical-market integration is improving: SEBI’s proposed phased introduction of physical settlement in select agricultural contracts, alongside MCX’s expanded Good Delivery framework to silver and additional domestic refiners, should strengthen the exchange’s linkage with the underlying physical market.

* RBI funding changes remain a manageable near-term offset: RBI’s 2026 creditfacility framework tightens the treatment of bank funding for capital-market intermediaries, including restrictions on bank finance for proprietary trading, while retaining bank guarantees against exchange margin/security requirements subject to prescribed collateralization. Management does not expect an adverse impact on MCX activity

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