MCX currently has zero debt on its book, and major
capex to fuel growth has already been incurred by the company. Secondly, the
company reported investment and cash worth Rs1,324cr at the end of 9MFY2012,
which works out to Rs260/share. On an annualized basis, the stock will be trading
at 15.1x and 18.1x at the lower and upper band on FY2012E earnings,
respectively, which we believe is fair compared to global peers, which trade at
18x-19x TTM earnings; further, the recent off-market deals value MCXs Indian
peers, NSE and BSE, at 22x-24x 9MFY2012 annualized earnings. We believe
MCX being the only major commodity exchange in India and the worlds fifth
largest exchange can witness strong growth in revenue and profitability going
ahead, which makes its valuation much more attractive than global peers. Hence,
we recommend Subscribe to the issue on account of its relatively fair valuations.

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