MCX Share Price: Stock drops 12% on contract extension with 63 Moons, latter jumps to 52-week high

"We have once again agreed to the eleventh-hour request by MCX, which according to them is for the 'last time' for one more time," the statement said. "We sincerely wish that this 'last time' really happens someday," an exchange filing from 63 Moons said on Thursday.

The commodity trading exchange had chosen TCS in September 2021 as its technology solutions provider for its growth and transformation journey. As part of the plan, TCS would help MCX build a new technology core and transform its trading and post-trading functions. This was done as MCX believed that the transition would reduce overall costs.

However, it has not been able to transition to the new platform within the stipulated timelines, leading to multiple extensions with 63 Moons. The contract with 63 Moons ended in September last year.

Brokerage firm Morgan Stanley has maintained its underweight rating on MCX with a price target of Rs 1,125. It says that the extension of the contract with 63 Moons will wipe out most of its financial year 2024 net profit. Although forecasts for financial year 2025 will remain unaffected if the implementation takes place before December 2023, the uncertainty could weigh on the stock price, Morgan Stanley said in its note.

Investec has downgraded MCX to hold from the earlier rating of buy, adding that the company seems to have underestimated the complexity involved in the technology transition. It has significantly downgraded its financial year 2024 Earnings Per Share (EPS) estimates to factor in the additional costs.

MCX's EPS estimates for financial year 2024 have also been cut by 69 percent by Motilal Oswal, who said that the delay in transition will impact new product launches as well as increasing FPI participation in the segment.