Multi Comm. Exc.

Multi Commodity Exchange reported a 'phenomenal year' for FY25, with consolidated income reaching INR 1,208 crores, representing a 59% year-on-year growth. The fourth quarter of FY25 also demonstrated robust performance, showing a 61% growth compared to Q4 FY24. For the full year, EBITDA closed at INR 761.5 crores with a strong 63% margin, and profit after tax (PAT) was INR 560 crores, achieving a 46% margin.

The significant financial growth was primarily driven by a healthy increase in Average Daily Throughput (ADT), which nearly doubled by 101% in FY25, rising from INR 1 trillion to INR 2.2 trillion for both futures and options. Options premium ADT also grew substantially by about 85%. This growth was observed across all product lines, with MCX being recognized as the world's largest commodity options exchange in 2024. The exchange also saw healthy deliveries, including 7 metric tons of gold and 663 metric tons of silver.

The increase in operating costs during Q4 FY25 was attributed to specific factors. Employee expenses included a 75% one-time^📎 incremental expense related to performance payouts, with the remaining 25% for capacity building. IT costs experienced a 30% timing concentration due to warranty and annual contract renewals. Management expects FY26 tech costs to be around INR 90-110 crores and employee costs between INR 150-160 crores, with overall expense ratios expected to remain flat.

MCX has a robust new product roadmap, including index options, weekly expiry options, and electricity futures. While the company is fully ready from a technical and go-to-market standpoint, the launch of these products is contingent on receiving regulatory approvals. The recently launched Gold Ten futures on April 1, 2025, have shown a very good response, particularly the 10-gram gold coin, and the company plans to launch silver micro options (30 kg, 5 kg, and 1 kg) in the shorter term.

Market participation saw significant growth, with traded clients increasing by 39% year-on-year to 13 lakhs. Participation grew across all categories, including commercial, retail, and financial institutions. MCX has onboarded approximately 140 FPIs, contributing to agency numbers. The exchange holds top positions in FIA rankings for crude oil and natural gas options, and second for gold and silver options, indicating its growing global prominence.

The Settlement Guarantee Fund (SGF) contribution, which accounts for approximately 7% of total transaction income, includes mandated contributions to ISF and IPF. Management views SGF contributions as essential for managing member margins and increasing volumes. The company emphasizes its agility in tech investments and readiness for growth, with a focus on continuous tech refresh and expansion of network capacity to support higher volumes and technology-oriented participants.

FPI participation norms were introduced in H2 FY22, with active participation starting in FY23. Currently, FPIs are primarily allowed to trade in crude oil and natural gas. Management anticipates increased FPI participation as more products become available under their ambit. The lower premium-to-notional ratio for gold options compared to crude oil and natural gas is attributed to gold's lower volatility, rather than cannibalization, as overall volumes are growing across products.