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Higher expenses lead to EBITDA miss

* MCX’s operating revenue stood at INR7b (in line), up 88% YoY but down 21% QoQ, reflecting normalization after an exceptionally strong volatility-driven 4QFY26. Meanwhile, underlying business fundamentals remained healthy.

* Opex grew 58% YoY to INR2.1b, driven by staff costs (+28% YoY/+25% QoQ to INR575m; 19% above estimates), while other expenses rose 74% YoY but declined 15% QoQ to INR1.5b (11% above estimates). EBITDA nearly doubled YoY to ~INR4.9b but declined 26% QoQ, with margins at 70.4% (vs. 64.8% in 1QFY26 and 74.9% in 4QFY26).

* PAT stood at ~INR4.1b (4% below estimates due to higher operating expenses), doubling YoY but declining 22% QoQ.

* Strong traction in Silver 100 Gram Futures, electricity derivatives, and 10- gram gold contracts, along with upcoming metal and commodity index products and the commercial launch of the Coal Exchange of India, should support product diversification and broader market participation.

* We have cut our EPS estimates for FY27/FY28 by 5%/4%, respectively, to factor in the current volume run-rate and higher costs owing to 1Q trends. We expect revenue/EBITDA/PAT to expand at 19%/17%/19% CAGR over FY26-28. We reiterate a Neutral rating on the stock with a one-year TP of INR2,790 (premised on 38x FY28E EPS).

Key takeaways from the management commentary

* Data services remain a long-term monetization opportunity, with the current focus on wider adoption of MCX benchmark prices across AMCs.

* RBI's revised bank guarantee norms have had no material impact on trading activity so far, though they may increase funding costs for some participants. However, the impact cannot yet be quantified, as collateral utilization varies daily across members.

* Discussions with the regulator continue on key initiatives, including expanded FPI participation, position limits, and co-location, although no implementation timelines were provided

Valuation and view

* While the long-term story of under-penetration and optionality from new products continues to remain intact, in the near to medium term, we expect volumes to remain at risk, given the current run rate has remained highly volatile. In addition, the impact of the RBI’s regulations on prop books may not have taken full effect yet.

* We have cut our EPS estimates for FY27/FY28 by 5%/4%, respectively, to factor in the current volume run rate and higher costs owing to 1Q trends. We expect revenue/EBITDA/PAT to expand at 19%/17%/19% CAGRs over FY26-28. We reiterate a Neutral rating on the stock with a one-year TP of INR2,790 (premised on 38x FY28E EPS).

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