MCX

: Bullion Momentum Strong, But Volume Sustainability Key

has surged nearly 80% in 2025, scaling an all-time high of ₹11,219 ahead of its five-for-one stock split effective 2 January. The rally has been driven by strong bullion trading volumes amid soaring gold and silver prices. Brokerages have scrambled to upgrade estimates, but questions remain about whether transaction revenue growth can sustain if volumes taper despite higher commodity prices. 1. Broker Upgrades and Valuation Re-Rating - Motilal Oswal raised FY27 EPS estimates by 27% post Q2FY26 results. - Morgan Stanley hiked its target price by 66% to ₹11,135, lifting FY27 EPS estimates by 20%. - The upgrades reflect P/E multiple re-rating rather than dramatic earnings revisions. - Q2FY26 transaction charges: ₹337 crore (₹114 crore futures, ₹223 crore options). - Bullion’s share rose to 43% from 36% in Q1, while energy fell to 57% from 64%. - The shift reflects declining energy turnover and rising bullion turnover. - Bullion futures hit record highs in October, suggesting Q3FY26 could outperform Q2. - Rising gold (+65% in 2025) and silver (+148%) prices, coupled with intraday volatility, attract traders. - MCX launched monthly options on BULLDEX (gold-silver 60:40 index) in October, with weekly contracts under evaluation. - Transaction charges depend on commodity price × trading volume. - Higher prices don’t guarantee higher turnover if volumes decline, as seen in equities (NSE turnover fell despite Nifty gains). - Sustained volume growth is critical for MCX’s revenue trajectory. - MCX trades at 50x FY27e P/E, ~25% premium to BSE. - Strong order flow from bullion contracts supports near-term optimism, but earnings risk persists if volumes soften. - Investors must weigh stretched valuations against product innovation and bullion momentum.