CRISIL grades MCX IPO 5/5

Multi Commodity Exchange of India (MCX) has been assigned a CRISIL IPO grade of "5/5" (pronounced "five on five") by CRISIL Equities. A grade on 5/5 indicates that the fundamentals of the IPO are strong compared to the other listed equity securities in India. The grade reflects MCX's leadership position in the Indian commodity futures market over the past four years, with 82 percent share of the overall traded turnover in FY10. It was on March 31 that MCX filed a draft papers for the IPO with capital market regulator Sebi. According to the market sources, the share sale is expected to raise an estimated 800 crore.

The number of shares being offered are 6.4 million (100 percent offer for sale). The objective of the issue is to achieve benefits of listing in order to enhance brand name and provide liquidity to existing shareholders. Edelweiss Capital, Citigroup Global Markets India, Morgan Stanley India are the lead managers.

MCX's operating income has grown at Compound Annual Growth Rate (CAGR) of 18.3 percent over FY08-10, with healthy profitability. EBITDA margin and adjusted profit margin were 57.5 percent and 37.2 percent, respectively in FY10. The company has sufficient cash balance (21 percent of the FY10 balance sheet) to fund its future requirements

Multi Commodity Exchange of India (MCX) is an electronic commodity futures exchange. Set up by Financial Technologies (India) (FTIL) as a demutualised exchange, it has permanent recognition from the Government of India to facilitate online trading, clearing and settlement operations for commodity futures across the country.

MCX holds long-term investments in other operational exchanges - MCX Stock Exchange (5percent equity stake as permissible under MIMPS Regulations) and Dubai Gold and Commodities Exchange (5 percent equity stake). MCX also holds 634 million warrants in MCX-SX, which carry no voting or dividend rights. The company may generate more cash as and when it decides to liquidate these investments.