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MCX drops lower as Q1 performance suffers from greater software costs

Jul 31, 2023

By: BlinkX Research Team

On July 31, MCX shares opened lower due to the company's net profit for the April-June quarter being negatively impacted by the significant licensing and maintenance fees paid to 63 Moons Technologies.

As its migration to the new trading platform continued to be delayed, MCX opted in June to extend its license and maintenance contract with 63 Moons Technologies for an additional six months.

Since September 2022, when the previous contract with 63 Moons expired, MCX has been unable to meet deadlines to switch to the new platform developed by TCS. Up until September 2022, when the original contract was in effect, MCX paid 63 Moons a software support and licensing cost of almost Rs 16 crore every three months.

For the initial three-month extension that concluded in December 2022, the price increased by an additional Rs 67 crore. MCX spent Rs 87 crore in the March quarter and most likely did the same in the June quarter. MCX will pay Rs 125 crore every quarter for the forthcoming six-month extension.

At the end of June, Kotak Mahindra Bank alone owned 15% of the company, while domestic mutual funds held 34.4%, foreign portfolio investors held 23.49%, and other investors held the remaining 2.49%.

Although the company has strong topline growth and a 96% market dominance in commodities futures, investors are closely watching the exchange's switch to TCS' software by December. The business has set its results call for July 31 at 6 p.m.

The commodities derivatives exchange's consolidated profit for the quarter was Rs 19.6 crore, down 52.6% from the same time last year due to weak operational results. In the meantime, operating revenue increased 34% to Rs 145.7 crore over the same period last year.

Source: Media Reports