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India Equity Research Reports, IPO and Stock News
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Key Takeaways
Case of MCX-SX transaction fees cleared
MCX-SX (owned by Financial Technologies (FTECH)) started levying transaction
charges in its currency derivatives segment from August 2011. Before this, the
company was compelled to offer free transaction services in NSE's zero-pricing
regime.
MCX-SX posted losses of ~INR1.5m a day due to the non-levy of transaction charges.
This is now set to change after CCI found the NSE guilty of abusing its market
dominance and asked it to stop unfair trade practices like subsidizing services.
MCX-SX will charge up to INR1.10 per INR100,000 of average daily traded value.
MCX going strong, IPO could unlock value
Stake sale in MCX's last two transactions valued the exchange at ~USD1b, the last
of which took place in February 2008. The exchange has had sustained high volume
and profit growth, and should be able to list at a significantly higher valuation.
August trading volumes averaged over INR693b a day against INR479b a day in July
and INR403b in June. At this rate, the company expects higher PAT than it estimated.
New exchanges see up-tick in valuations
The Singapore Mercantile Exchange's trading volume and turnover surged over the
past few weeks, hitting a historic high with INR16b worth of contracts traded in a
day only a few days ago. SMX, which went live on 31 August 2010, saw its membership
double over the past 11 months, crossing 50.
Unlike in India, where brawls with regulatory authorities and competitors hamper
progress on exchange ambitions, the company operates in a friendlier environment
outside India as far as regulations are concerned. The company's increasing volumes
bode well for FTECH's profitability, which is 100% owner of the exchanges.
Negatives fully priced in, incrementally positive news can boost stock price
FTECH's liquid cash and its proportionate share in MCX (assuming USD1.2b valuation
for MCX) adds up to INR29.4b and the company's market cap is INR34b. This excludes
FTECH's ventures in the financial ecosystem, including its technology business, foreign
exchanges and contingent valuation on MCX-SX.
Negative news flow on MCX-SX, delay in MCX's IPO and depressed volumes in new
exchanges hurt valuations. Increasing volumes on the MCX and transaction charges
in currency derivatives trading appear to be initial signs of a turnaround, and more
incrementally positive news could trigger a surge in the stock price.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Case of MCX-SX transaction fees cleared
MCX-SX (owned by Financial Technologies (FTECH)) started levying transaction
charges in its currency derivatives segment from August 2011. Before this, the
company was compelled to offer free transaction services in NSE's zero-pricing
regime.
MCX-SX posted losses of ~INR1.5m a day due to the non-levy of transaction charges.
This is now set to change after CCI found the NSE guilty of abusing its market
dominance and asked it to stop unfair trade practices like subsidizing services.
MCX-SX will charge up to INR1.10 per INR100,000 of average daily traded value.
MCX going strong, IPO could unlock value
Stake sale in MCX's last two transactions valued the exchange at ~USD1b, the last
of which took place in February 2008. The exchange has had sustained high volume
and profit growth, and should be able to list at a significantly higher valuation.
August trading volumes averaged over INR693b a day against INR479b a day in July
and INR403b in June. At this rate, the company expects higher PAT than it estimated.
New exchanges see up-tick in valuations
The Singapore Mercantile Exchange's trading volume and turnover surged over the
past few weeks, hitting a historic high with INR16b worth of contracts traded in a
day only a few days ago. SMX, which went live on 31 August 2010, saw its membership
double over the past 11 months, crossing 50.
Unlike in India, where brawls with regulatory authorities and competitors hamper
progress on exchange ambitions, the company operates in a friendlier environment
outside India as far as regulations are concerned. The company's increasing volumes
bode well for FTECH's profitability, which is 100% owner of the exchanges.
Negatives fully priced in, incrementally positive news can boost stock price
FTECH's liquid cash and its proportionate share in MCX (assuming USD1.2b valuation
for MCX) adds up to INR29.4b and the company's market cap is INR34b. This excludes
FTECH's ventures in the financial ecosystem, including its technology business, foreign
exchanges and contingent valuation on MCX-SX.
Negative news flow on MCX-SX, delay in MCX's IPO and depressed volumes in new
exchanges hurt valuations. Increasing volumes on the MCX and transaction charges
in currency derivatives trading appear to be initial signs of a turnaround, and more
incrementally positive news could trigger a surge in the stock price.
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