Multi Commodity Exchange of India Ltd. is planning to invest up to ₹200 crore ($21 million) to establish coal and minerals trading platforms as the government opens these sectors to improve price discovery and transparency. According to reports from The Hindu BusinessLine, the company is seeking licenses to start coal and minerals exchanges, with Managing Director Praveena Rai confirming the investment plans in an interview. The Securities and Exchange Board of India has approved MCX's plan to invest approximately ₹100 crore each in the new coal and minerals businesses, as reported by The Hindu BusinessLine. The company has already incorporated separate units to run the two trading operations, with regulatory filings showing the organizational structure. India's largest commodity exchange is seeking licenses to start coal and minerals exchanges, with Managing Director Praveena Rai stating that "India is a major producer of coal and minerals but their prices in the domestic market are mostly set abroad, so that's really the policy imperative for the government."
MCX shares climbed as much as 3.1% to ₹3,022.50 on Tuesday, marking the most intraday gain since August 12, according to The Hindu BusinessLine. As of the last close, the stock has risen 32% this year. The positive market reaction reflects investor confidence in MCX's strategic expansion into new commodity segments. The exchange's strong performance demonstrates growing investor appetite for companies positioned to benefit from India's commodity market liberalization.
The Securities and Exchange Board of India has approved MCX's plan to invest approximately ₹100 crore each in the new coal and minerals businesses, as reported by The Hindu BusinessLine. The company has already incorporated separate units to run the two trading operations, with regulatory filings showing the organizational structure. However, MCX still requires approvals from the Coal Controller Organisation and the Indian Bureau of Mines, the respective licensing authorities. The government has notified rules for commodity exchanges to start trading coal, iron ore, bauxite, and other minerals, according to The Hindu BusinessLine reports. Prime Minister Narendra Modi's government has opened a portal allowing applications to license new coal exchanges, with a minerals bourse portal expected to start soon. The first exchanges in each segment are expected to be operational in the financial year starting April 1.
The government has notified rules for commodity exchanges to start trading coal, iron ore, bauxite, and other minerals, according to The Hindu BusinessLine reports. Sellers and buyers will be allowed to trade physical delivery contracts through centralized electronic platforms, creating a more transparent pricing system and improving supply chain efficiency. As per The Hindu BusinessLine, this initiative addresses the policy imperative of bringing domestic price discovery to India's major commodity producing sectors. Additionally, a recent Sebi consultation paper has emerged as a potential growth catalyst, proposing to allow foreign portfolio investors to participate in physically settled non-agricultural commodity derivatives and non-agricultural index derivatives. As per UBS, this proposal would structurally deepen the commodity market and become an important medium-term growth catalyst for MCX.
MCX currently derives most of its business from gold and energy derivatives trading, with precious metals accounting for more than half of the exchange's daily turnover in the quarter ended June 30, as reported by The Hindu BusinessLine. Energy, including oil, gas and power, contributed approximately 40% of the exchange's business. Managing Director Praveena Rai indicated that each new segment will grow, with the company focused on developing commodity markets further. The exchange has attracted significant institutional interest, with six top-performing mid- and small-cap mutual funds holding MCX as their sole common stock. Among the mid-cap schemes, ICICI Pru Midcap Fund delivered a one-year return of about 19% with the largest MCX exposure at 4.33%, while the small-cap group generated stronger returns with Trust MF Small Cap Fund returning over 32% and holding 1.85% in MCX. The simple average allocation across the six schemes is approximately 1.62%.
Analysts at UBS have upgraded MCX to Buy and raised the target price to ₹3,500 from ₹2,560, citing the potential growth catalyst from regulatory changes. The brokerage expects average daily transaction-fee revenue of ₹98 million in both FY27 and FY28 and forecasts operating leverage to lift MCX's EBITDA margin by four percentage points from FY26 to 77% in FY28. JPMorgan has also upgraded its rating to 'Overweight' from 'Neutral' and hiked its target price to ₹3,500 from ₹2,560, noting that Sebi's proposal to admit FPIs into non-agri commodity index derivatives marks the deepest structural widening of foreign investor base since FPIs were first onboarded in 2022. However, Dolat Capital flags regulatory and valuation risks, estimating that bank guarantee-based exposure accounted for about 15% to 20% of futures and options volumes, with potential cost increases from 1% to 11% making some proprietary trading strategies unviable.
