MCX India Ltd

Update (28th Aug 2013): Soon after I analyzed and posted, the world came to know about NSEL crisis. I suddenly realized I'm in 60%+ loss in the moderate positions I had accumulated in MCX, which I thought was undervalued at Rs. 800. Anyways, lot of emotions, reactions, etc. I've finally made my decision on what I'll do with it, but before that, here're some links which I want you to refer to:

• Discussion on SafalNiveshak Google Group
• Nice post by Prof. Bakshi and the discussion in comments section.

Hmm, so what I decided? Here's it:

• There're decent chances that FTIL group's demise is fast on its way, and sooner or later, they'll have to let go of their control on MCX
• The uncertainty is - how long it can take for this to happen
• When such a stake sale occurs, MCX may realize at least "fair valuation", and if my analysis if not grossly wrong, the stock price should come back to my initial buying price. Probably higher
• However, if we consider that as a reasonable probability event also, there's risk of losing all of the investment - if MCX stake sale doesn't occur and business loses trust, market share, and its sheen.
• Thinking in terms of probability, therefore, it DOES NOT make sense to invest more money into the business right now. The risk-reward ratio is not highly favorable to warrant the risk.

However, since there's good chance for a bounce back (and as I write this, the stock is now locked in upper 5% circuits for few sessions now, in the anticipation of some groups keen in buying FTIL's stake in MCX), I'll hold on to the investment and exit when the news of stake sale is out, or I find some other strong reason t quit this investment. However, I won't put in new money into this investment until I know that MCX is a "fresh" business, under a new, credible owner.

Goodbye :)

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June 24th, 2013: I analysed this stock in quite some details and posted my analysis on Safal Niveshak StockTalk. Enjoy reading.