Silver, gold: MCX trades at 10% premium over BSE; worth a buy?

HDFC Securities in a fresh note said Multi Commodity Exchange (MCX) remains a compelling growth story, powered by rising bullion volumes, new product launches, and regulatory tailwinds. The brokerage expects gold and silver options to emerge as major growth drivers, helping diversify MCX’s revenue mix beyond crude and natural gas.

Gold, silver fuels options growth
Gold and silver options have surged since MCX introduced monthly expiries and smaller-sized contracts, supported by higher prices and volatility. The average daily traded value (ADTV) for options premiums rose to Rs 67,000 crore in October 2025, up from Rs 41,000 crore in Q2FY25. Bullion now contributes around 60 per cent of total notional volume and 30 per cent of options premium ADTV, compared with only 20 per cent and 8 per cent a few quarters ago.

Gold and silver options notional ADTVs stood at Rs 1.7 lakh crore and Rs 1.02 lakh crore, respectively, in September 2025. HDFC Securities expects bullion to account for around 40 per cent of total premium volumes by FY27, materially reducing earlier dependence on crude and natural gas, which once made up nearly 85 per cent of the mix.

New products
The upcoming cash-settled index contracts namely Metldex and Bulldex are expected to drive fresh participation from foreign portfolio investors (FPIs) and institutions. SEBI’s plan to allow FPIs and domestic institutions in non-cash-settled commodities is another tailwind.

Currently, FPIs make up only around 3 per cent of MCX’s trading volume, compared with about 20 per cent for equity exchanges, indicating significant potential. Meanwhile, co-location facilities that enable high-frequency trading could further lift activity, echoing trends seen in equity markets.

Earnings outlook
HDFC Securities expects MCX to log a 27 per cent CAGR in revenue and 33 per cent CAGR in profit after tax (PAT) over FY25–FY28, led by strong options growth. The brokerage has raised its revenue and EPS estimates by 7–9 per cent, maintained a ‘BUY’ rating, and set a target price of Rs 10,000, valuing the stock at 46 times Sep-27E core EPS.

MCX currently trades at 42 times FY27E P/E, about a 10 per cent premium to BSE. Historically, it has traded at a roughly 15 per cent premium, supported by product innovation and lower regulatory risks compared with equity exchanges.

Q2 results preview
For Q2FY26, MCX is expected to post Rs 375 crore in revenue (flat quarter-on-quarter, up 31 per cent year-on-year) and PAT of Rs 201 crore (up 31 per cent YoY). Margins are likely to remain healthy at around 65 per cent. Volumes have already picked up sharply in October, setting the stage for a stronger Q3.