MCX: JP Morgan, UBS and Jefferies turn bullish as FPI access opens a new volume opportunity

The brokerages also pointed to bullion, commodity volatility, higher trading activity and the potential development of commodity index derivatives as important factors for the company’s earnings outlook. The focus has now moved beyond the recent trading momentum to whether the proposed FPI framework can translate into sustained incremental volumes. 

JP Morgan on MCX: FPI access could drive volumes

JP Morgan sees the proposed FPI access as a significant opportunity for MCX because it could widen the foreign investor base in exchange-traded commodity derivatives. The brokerage said that bullion is likely to be the main beneficiary and expects the additional participation to feed into futures and options activity.

“We read this as a structural widening of the FPI base for MCX, with bullion as the primary beneficiary,” JP Morgan added..

The brokerage expects futures average daily turnover to grow 9.1% in FY28 and 14% in FY29. It expects options average daily premium turnover to increase 4.5% in FY28 and 10% in FY29. 

JP Morgan upgraded MCX to ‘Overweight’ from ‘Neutral’ and raises its price target to Rs 3,500 from Rs 2,560. The revised target implies an upside of 17.8%.

Bullion remains central to the brokerage’s view. JP Morgan says bullion accounted for about 63% of July futures average daily turnover and about 23% of July options average daily premium turnover. It also expects higher volumes to support earnings through operating leverage, while it does not increase its estimates for the index derivatives business because that market remains nascent.

The brokerage also identified implementation as a risk. The regulatory framework remained at the consultation stage, and JP Morgan said the final circular could be delayed or changed. Actual FPI participation will also depend on the calibration of the Proprietary Risk Absorption Charge.

UBS on MCX: Regulation could support a re-rating

UBS has also become more positive on MCX, with the proposed FPI participation in physically settled non-agricultural commodity derivatives and non-agricultural index derivatives forming a key part of its thesis. The brokerage pointed out that the proposal could broaden participation and deepen the commodity derivatives market.

“We believe this will structurally deepen the commodity market and become an important medium-term growth catalyst for MCX,” UBS said.

UBS upgraded MCX to ‘Buy’ from ‘Neutral’ and raised its 12-month price target to Rs 3,800 from Rs 3,600. The revised target implies an upside of 27.9%.

The brokerage expects MCX revenue to rise to Rs 2,529.7 crore in FY27 from Rs 2,302 crore in FY26, followed by Rs 3,021.4 crore in FY28 and Rs 3,516.4 crore in FY29. 

UBS also expects operating leverage to support margins. It forecasts the EBIT margin at 67.7% in FY27, 69.9% in FY28 and 70.8% in FY29. Average daily transaction fee revenue is expected to rise to Rs 11.8 crore in FY28 from Rs 9.8 crore in FY27.

Moreover, the brokerage expects volatility in commodities, particularly crude oil and bullion, to support trading activity. It also said that an increase in gold volatility and prices could provide additional support for bullion activity.

Jefferies on MCX: Wider FPI participation could add to earnings

Jefferies also remained positive on MCX and focused on the potential earnings contribution from wider FPI access to commodity derivatives. Its report says the proposed framework covers non-agricultural index derivatives as well as non-cash-settled non-agricultural commodity futures and options.

Jefferies estimated that similar FPI participation in non-cash-settled non-agricultural contracts could add 3% to MCX’s PAT. It also sees a potential contribution from commodity index options such as Bulldex and Metldex if trading activity develops.

“Similar participation in non-cash/non-ag contracts could add 3% to MCX’s PAT,” Jefferies said.

Jefferies retains a ‘Buy’ rating on MCX and sets a price target of Rs 3,600. The target implies an upside of 21.2%. The brokerage valued MCX at 42 times September 2028 estimated earnings and builds in a 22% earnings CAGR over the next three years, supported by a 21% revenue CAGR and 90 basis points of EBITDA margin expansion.

The brokerage also pointed to the limited participation of FPIs outside energy contracts.For Jefferies, the potential benefit goes beyond a single volume increase. The proposed framework could broaden the participant base, increase liquidity and market depth, and support activity in commodity index derivatives. Competition and regulation remain key risks to its valuation.

MCX Q1 FY27: Trading activity keeps the earnings engine running

The brokerage views come against a strong Q1 FY27 operating performance. MCX reported revenue of Rs 700 crore in Q1 FY27, an 88% year-on-year increase, according to UBS. Futures average daily turnover rose 47% year-on-year to Rs 10,500 crore, while options notional average daily value increased 266% year-on-year.

UBS said performance moderated sequentially from Q4 FY26, but participation trends remained healthy. The number of traded clients doubled year-on-year to 13.7 lakh.

“Management remains positive due to continued growth in client participation,” UBS said.

The company also reiterated its focus on expanding its product pipeline and scaling data services through its price and coal exchange initiatives. UBS expects the combination of trading activity and operating leverage to support the earnings trajectory over the coming financial years.

The Q1 numbers provide the operating base for the brokerages’ forward estimates, while the proposed FPI framework represents a potential additional source of participation. The two factors are treated separately in the research views, with regulatory implementation still to be established.

MCX outlook: Bullion central to the volume story

Bullion has emerged as a common thread in the brokerage assessments, although the firms place different weight on it. JP Morgan identifies bullion as the main beneficiary of wider FPI participation and says it already accounts for a substantial share of MCX’s trading activity.

UBS takes a broader view, linking commodity volatility with trading activity and pointing to crude oil and bullion as important contributors to near-term volumes. It expects sustained volatility to support activity and sees greater gold volatility and prices as a possible additional support for bullion trading.

Jefferies, meanwhile, focuses on the potential for broader FPI participation across commodity categories and on the development of commodity index derivatives. Its assessment is that greater participation could add to liquidity and earnings if the proposed framework translates into actual activity.

The common element across the three reports is the potential connection between a broader participant base, higher trading activity and operating leverage.

MCX stock outlook: Regulatory execution remains the key risk

The bullish brokerage views remained conditional on the proposed regulatory changes being implemented.The regulatory proposal remained a potential catalyst rather than an established earnings contributor. The brokerages’ estimates incorporate their respective expectations around participation, volumes and operating leverage, but the eventual outcome will depend on the final framework and market response.

MCX stock: What the three global brokerages expect

The three global brokerages have all adopted positive views on MCX, but their estimates are built around different combinations of volume growth, regulation and operating leverage.

JP Morgan upgrades MCX to ‘Overweight’ and raises its target to Rs 3,500, implying 17.8% upside. Its central earnings argument is wider FPI participation, stronger futures and options activity and the resulting operating leverage. It expects futures average daily turnover growth of 9.1% in FY28 and 14% in FY29.

UBS upgrades MCX to ‘Buy’ and raises its target to Rs 3,800, implying 27.9% upside. Its estimates show revenue reaching Rs 3,516.4 crore and net earnings reaching Rs 2,406.8 crore in FY29. UBS also expects the EBIT margin to reach 70.8% in FY29.

Jefferies retains a ‘Buy’ rating with a Rs 3,600 target, implying 21.2% upside. It expects a 22% earnings CAGR over three years, supported by a 21% revenue CAGR and 90 basis points of EBITDA margin expansion.

The three views converge on wider participation and higher activity as important potential earnings drivers, while their individual estimates differ in the degree of benefit expected from regulation, volumes and operating leverage.

Conclusion

MCX’s brokerage story is increasingly tied to what happens next with foreign participation in commodity derivatives. JP Morgan, UBS and Jefferies all see the proposed FPI access as a potential catalyst, while bullion, commodity volatility, trading activity and operating leverage provide additional support to their respective earnings views.

The targets also show different levels of expected upside, with JP Morgan at 17.8%, Jefferies at 21.2% and UBS at 27.9%. The key variables ahead remain the final regulatory framework, actual FPI participation, trading volumes and the extent to which higher activity translates into earnings.

Disclaimer: This article is based on brokerage research and company-related information contained in the referenced reports. Ratings, earnings estimates, price targets and upside calculations represent the respective brokerage views and are subject to change. The upside percentages stated in this article are calculated using the MCX price of Rs 2,971 specified for the article. The article is for informational and news-reporting purposes and does not constitute investment advice, a recommendation or an offer to buy or sell any security. Readers should conduct their own research and consult a SEBI-registered financial adviser before making investment decisions.