After gaining nearly 63% in 1 year and surging about 34% so far in 2026, the share price of Multi Commodity Exchange of India (MCX) is in the spotlight.
Naturally, investors are asking whether there is still room for further upside or if much of the optimism is already reflected in the stock price.
According to the latest brokerage report by Jefferies, the answer leans towards more upside. The global brokerage has initiated coverage with a ‘Buy’ rating and a target price of Rs 3,600. This implies an upside potential of around 27% from the current market price.
The brokerage believes India’s commodity derivatives market is still at an early stage compared with global markets, creating a long runway for MCX to grow over the coming years.
Here’s what the brokerage report says –
India’s commodity market still has a long way to go
One of the biggest reasons behind the brokerage house’s positive view is the relatively low penetration of commodity trading in India.
Jefferies noted that while commodity futures trading in countries such as the United States and China is larger than their equity cash markets, India’s commodity market remains much smaller.
The brokerage estimates that commodity futures turnover is currently only about half of the country’s equity cash turnover, while commodity options account for just around 1% of equity options activity.
The report said, “India’s commodity trading market is much smaller.” It expects this gap to gradually narrow over the next decade and forecasts that commodity futures’ Average Daily Turnover (ADTO) could grow three times, while commodity options turnover may increase six-fold over the same period.
What could fuel MCX’s next phase of growth?
As per the brokerage house, MCX is well placed to benefit as trading activity expands across the commodity market.
The brokerage expects the company’s revenue to grow 20% annually between FY26 and FY29 on a compounded basis, despite a high base.
It expects commodity futures turnover to grow at around 5% CAGR, while commodity options turnover could expand at 28% CAGR during the period.
Jefferies said this growth is likely to be supported by two key trends. The first is expansion into new products, stating “new products like battery metals and chemicals” could create additional trading opportunities. The second is rising retail participation, with the brokerage highlighting that “only 1/5th of NSE option traders trade MCX’s options.”
Margins and earnings could improve further
Jefferies also believes profitability may also improve.
As per the brokerage house report, MCX’s Earnings Before Interest and Taxes (EBIT) margin could expand by around 260 basis points between FY26 and FY29 as operating leverage offsets higher technology costs and regulatory expenses.
The report further forecasts an earnings CAGR of 22% over the next three financial years. Jefferies also pointed out that MCX enjoys a relatively profitable business model because it has lower regulatory fees on longer-duration contracts and does not incur clearing charges similar to some other exchanges.
Strong cash flows
The brokerage also highlighted MCX’s balance sheet.
Jefferies added that the company has a net cash position, positive working capital and limited capital expenditure requirements. As a result, “strong cashflows combined with a net cash balance sheet positions MCX well to increase dividend payouts.”
The report noted that the company has distributed around 30% of its profits as dividends over the last two years, while its dividend payout policy allows for payouts of up to 60%.
Growth vs risks
Jefferies believes several future opportunities are not yet fully reflected in its estimates.
The brokerage said “optionalities could add another 15-20% to earnings” over the medium term. These include a potential coal exchange, co-location services, participation by Foreign Portfolio Investors (FPIs) in non-cash derivatives and the introduction of weekly options contracts. However, it cautioned that some of these initiatives would require regulatory approvals before becoming operational.
At the same time, the brokerage flagged risks including increasing competition in certain commodity contracts, regulatory changes and any increase in the Commodity Transaction Tax (CTT).
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