The MCX Management indicated that it continues to suggest the Finance Ministry repeal CTT.
On our estimates, transaction costs can increase by >35% (depending on the brokerage fee, which can vary). In our opinion, volumes of jobbers /
arbitrageurs who work on thin margins are most at risk, and there could be a flight to unorganized markets and/ or other asset classes.
Expiry of lock-in for pre-IPO holdings (~60% of shares outstanding) later this week could keep the stock under pressure. At 16.9x F2014e P/E, the valuation appears full given near-term headwinds and low earnings growth.
Morgan has set a price Target of Rs 1050 on the MCX Stock with EPS expectation of just Rs 62 for FY 14.
