Multi Commodity Exchange of India Limited — Q4 FY25 earnings call

Call held 9 May 2025

Management summary

Multi Commodity Exchange reported a phenomenal FY25 with consolidated income growing 59% YoY to INR 1,208 crores and PAT reaching INR 560 crores at a 46% margin. Average Daily Throughput (ADT) more than doubled, driven by strong performance across product lines. While Q4 saw increased employee and IT costs, management clarified these included one-time performance payouts and timing-related renewals. The company is poised for new product launches, awaiting regulatory approvals, and continues to expand market participation, including a 39% growth in traded clients.

Highlights

  • Consolidated income for FY25 grew by 59% YoY to INR 1,208 crores.

  • Q4 FY25 income demonstrated a strong 61% YoY growth.

  • EBITDA for FY25 stood at INR 761.5 crores with a robust 63% margin.

  • Profit after tax for FY25 was INR 560 crores, reflecting a 46% margin.

  • Average Daily Throughput (ADT) for futures and options doubled by 101% to INR 2.2 trillion in FY25.

Concerns

  • Employee expenses in Q4 FY25 included a 75% one-time incremental expense for performance payouts.

  • IT costs in Q4 FY25 had a 30% timing concentration due to warranty and annual contract renewals.

  • Regulatory approvals are pending for key new product launches like index options and electricity futures, delaying market introduction.

Key financials

2 periods

Q4 FY25

  • Options Revenue
    ₹179 Cr
  • Futures Revenue
    ₹75 Cr

FY25

  • Consolidated Income
    ₹1,208 Cr
    YoY +59%
  • EBITDA
    ₹761.5 Cr
  • EBITDA Margin
    63%
  • PAT
    ₹560 Cr
  • PAT Margin
    46%
  • ADT Growth
    101%
    YoY +101%
  • ADT Value
    2.2 Tn

What they filed

Q1 FY27: revenue up 88.2%, net profit up 103.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue286 301 291 373 374 +31%666 +121%889 +205%702 +88%
EBITDA179 193 160 241 242 +35%494 +156%665 +316%494 +105%
Net profit154 160 135 203 197 +28%401 +151%530 +293%413 +103%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Profitability

  • Expense Ratios Profitability · FY26 · Medium confidence stay flat
    We won't be able to call out a specific number, but I can tell you, overall, at an expense level, we expect our ratios to stay flat.

    — Praveena Rai

Operating Expenses

  • Tech Cost Operating Expenses · FY26 · Medium confidence INR 90-110 crores
    tech cost will be around INR 90 crores, let's say, INR- 100 crores, INR 110 crores

    — Chandresh Shah

  • Employee Cost Operating Expenses · FY26 · Medium confidence INR 150-160 crores
    employee cost will be between INR 150 crores to INR 160 crores

    — Chandresh Shah

What to watch in Q1 FY26

Launch of Index Options

next quarter
Current Ready, awaiting regulatory approval
Target Launch announcement

Why it matters

These are key new products expected to drive significant growth and expand MCX's offerings.

So yes, our new products road map is very much in place. As you know, there is a lot of homework that is required along with various approvals that we need before we can take this live. So we are — we have full readiness from our side, and we are waiting for the right green signal to take this to market.

Risks & concerns

  • Regulatory Approvals for New Products

    medium

    Launch of new products like index options, weekly expiry options, and electricity futures is dependent on receiving the 'right green signal' from regulators, causing delays despite internal readiness.

    Management acknowledged

  • Uncertainty on Co-location Facilities

    low

    Management declined to comment on media reports regarding SEBI contemplating co-location facilities, indicating a lack of clarity or official communication on the matter.

    Analyst not addressed

  • Cannibalization of Existing Products

    low

    Analyst questioned if the growth in gold options was cannibalizing crude oil volumes, but management clarified that overall growth across products indicates no cannibalization.

    Analyst downplayed

Q&A highlights

5 direct, 1 evasive
Cost Increase (Employee & IT) Direct
So if I were to look at the employee expenses, I would cut it at about 75%-25% in terms of the delta with 75% going into a one-time incremental expense associated with performance and 25% is really the readiness from a capacity building standpoint as we go into next year with all our growth plans in place. If you look at the IT costs, here, we do have a bit of a timing concentration in some of our warranty and sort of annual contract renewals.

Analyst questioned the sharp increase in operating costs, and management provided a detailed breakdown, attributing a significant portion to one-time or timing-related factors.

Asked by Devesh Agarwal

Capex and Depreciation Trends Partial
Yes. We do expect capitalization to sort of depreciation and amortization to continue at these levels because as we are growing significantly, and I think we just discussed that we are looking at we have doubled our volumes. And obviously, the tech refresh is a continuous process that would need to be there.

Analyst sought clarity on incremental capex and FY26 spend, but management only confirmed continued depreciation levels due to growth and tech refresh, without providing specific capex numbers.

Asked by Devesh Agarwal

Co-location Facilities Expenditure Evasive
We will not be able to comment on this at this stage because it's really based on what media is saying. Until we have regulatory clarity, we won't be able to comment on this.

Analyst asked about potential capex for co-location facilities based on media reports, but management declined to comment, citing lack of regulatory clarity.

Asked by Devesh Agarwal

New Product Launch Timelines (Index Options, Electricity Futures) Partial
So yes, our new products road map is very much in place. As you know, there is a lot of homework that is required along with various approvals that we need before we can take this live. So we are — we have full readiness from our side, and we are waiting for the right green signal to take this to market.

Analyst inquired about specific timelines for new product launches, and management indicated readiness but emphasized dependence on regulatory approvals.

Asked by Amit Chandra

Bullion Options Premium vs. Notional Volume Direct
Crude oil and natural gas have higher volatility than gold. And that is why you would see the kind of premiums you are seeing in gold. That is why despite the notional being higher, the premium value is substantially lower in proportion.

Analyst questioned the lower premium-to-notional ratio for gold options, and management explained it's due to gold's lower volatility compared to other commodities.

Asked by Amit Chandra

FPI Participation Growth and Limitations Direct
So the norms for FPI participation came in the second half of '22, and we started participation early in '23. So it's been more or less 2 years. And in those 2 years, you've seen the kind of participation we have. Now we also have to bear in mind that FPIs are only allowed to trade in crude oil and natural gas.

Analyst asked about increasing FPI participation, and management clarified the recent introduction of FPI norms and current product limitations, indicating future growth potential with broader product access.

Asked by Aravind R

Settlement Guarantee Fund (SGF) Cost Sustainability Direct
So Sanket, this is Chandresh. See, this 7% includes 11% of contribution to ISF and IPF, which is mandated as per SEBI regulation. And the SGF contribution is something which we look at the requirements, and we keep adding to that because that helps us in different ways to maybe manage the margins for the members, which helps in increasing the volumes.

Analyst questioned if the 7% of transaction income allocated to SGF is a recurring cost, and management explained its components and strategic importance for managing member margins.

Asked by Sanket

Nature of Index Options Direct
In indices, there is index futures and there will be options on the index itself. So it is not an option on the index futures. It will be the options on index. Therefore, there is hardly any correlation per se between the index futures and the options which will come on the indices. So these will be cash settled products, which will be based on the index itself.

Analyst sought clarity on the structure of upcoming index options, and management explained they would be cash-settled products based directly on the index, not on index futures.

Asked by Chintan Sheth

3 min read 7 chapters

Detailed narrative

Strong Q4 FY25 and Full Year FY25 Performance

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.

Drivers of Growth: ADT and Product Performance

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.

Cost Structure Analysis: Employee and IT Expenses

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.

New Product Pipeline and Regulatory Dependencies

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 and Global Recognition

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.

Settlement Guarantee Fund and Capital Allocation Strategy

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 and Market Dynamics

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.

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