This Kotak bet delivered 18x return in 11 years—and it's still compounding
A crisis-era contrarian bet by Kotak Mahindra Bank has turned into a multi-bagger. Market dominance and operating leverage powered the journey—now the focus shifts to how the next phase unfolds.
Kotak Mahindra Bank has built a reputation for taking long-term bets across a wide range of companies, including KFin Technologies, Pioneer Embroiderie, and Quadrant Televentures. But one investment stands apart, both for its timing and for what it has delivered over the years.
In 2014, when this company was facing a crisis, Kotak took a contrarian approach and invested ₹459 crore for a 15% stake, at ₹600 per share.
Over the last 11 years, that investment has grown nearly 18 times, with the stock now trading around ₹10,795. The company's valuation has increased from ₹3,060 crore to over ₹55,055 crore during the period.
Consequently, Kotak's investment of ₹459 crore has now grown to ₹8,258 crore. The returns did not come only from capital appreciation.
According to reports, Kotak also earned around ₹147 crore in dividends during this period, recovering nearly a third of its original investment.
The company is Multi-Commodity Exchange of India (MCX). And the key question now is: after such a long and profitable journey, what comes next? Let's take a closer look…
Near-monopoly and market infrastructure
MCX is India's largest commodity derivatives exchange, offering futures and options across bullion, energy, base metals, and a limited set of agricultural contracts. MCX is the undisputed market leader, accounting for about 98.1% of the total traded value of commodity futures and 97.4% of commodity options as of FY25.
Globally, the exchange ranks as the world's largest commodity options exchange and, by the number of contracts traded, the sixth-largest commodity derivatives exchange.
Its crude oil and natural gas options are the largest exchange-traded commodity options contracts globally within their respective categories. MCX has over 550 members, more than 32,000 authorised participants, and about 3.7 crore unique client codes.
Bullion, energy segments lead growth
The Indian commodity derivatives market has expanded sharply over the past three years, driven primarily by bullion and energy rather than agriculture. In the second quarter of FY26, the average daily turnover in futures and options (F&O) reached ₹411,269 crore, up ₹220,249 crore in Q2 FY25.
Bullion accounted for 56.8% of the total turnover, while energy contributed 42.6%. Base metals, which are strategically important for industrial hedging, accounted for only 1.8% of total activity.
The growth engine
The rapid growth in F&O in India has significantly benefited exchanges like MCX. Notably, options now contribute substantially to both volume and revenue in the commodities market. Trading activity on the MCX has accelerated materially, with average daily turnover (ADT) in options rising 91% year-on-year to ₹369,512 crore in Q2FY26. This far outpaced the 55% growth in the futures segment, where ADT reached ₹41,757 crore.
Several strategic and market factors contributed to this surge in the options segment, with growth heavily concentrated in the bullion segment.
In Q2FY26, bullion options ADT surged nearly 700% year-on-year to ₹201,183 crore, marking a step-change in participation. Energy ADT remained flat at about ₹169,977 crore, while base metals increased by 95% to ₹352 crore. The growing number of clients also supported the growth.
The number of unique clients trading options also grew to 6.4 lakh in Q2FY26, up from 5.4 lakh in the year ago period. Total traded clients across F&O reached a high of 7.9 lakh, from 6.8 lakh.
Notably, the share of clients trading futures increased to 54.8% in Q2FY26, up from 51.9% in Q2FY25, while the proportion of clients trading options declined marginally to 42% from 43.4%.
To maintain the pace of growth, MCX expanded its product suite by launching monthly silver options (both 30 kg and 5 kg contracts) and MCX BULLDEX options in October 2025. The shift from bimonthly to monthly expiries in bullion has also led to increased overall premiums.
Refreshing futures and hedging relevance
The exchange is actively refreshing its futures portfolio to increase market participation. This segment serves as a crucial tool for price discovery and physical hedging in India. To this end, MCX recently launched India's first electricity futures contract. The contract is recording an ADT of ₹34 crore, with over 2,000 lots traded on average and open interest exceeding 1,130 lots.
The exchange has also benefited from increased participation from more individuals. Mutual funds can now participate in commodity derivatives through hybrid and multi-asset schemes, as well as through gold and silver ETFs. Portfolio managers and select foreign investors have gained access to cash-settled non-agricultural contracts.
This is crucial for MCX, as institutional participation tends to be more stable, less speculative, and more closely linked to hedging needs. Although regulatory restrictions still limit the pace of change, every small relaxation of these rules increases liquidity and boosts trading volumes. MCX has also added 17 additional members this year to date.
Strengthening liquidity
MCX management plans to gradually expand its product range to meet growing demand. The exchange already has a strong pipeline of commodities that meet the requirements of scale and volatility. These products are expected to be launched following receipt of regulatory approvals.
Additionally, management anticipates organic growth following the launch of BULLDEX options. The exchange views this contract as a complement to its existing gold and silver variants and anticipates it will establish its niche in the market.
MCX is actively monitoring weekly expiry options to strengthen its market position and to support new launches. It continuously updates its portfolio, having recently relaunched nickel futures and introduced India's first electricity futures, both of which are showing strong momentum.
Financials catch up with volumes
MCX's financials in Q2FY26 demonstrate the operating leverage inherent in its business model. Revenue rose 31% year-on-year to ₹374 crore. Options revenue of ₹223 crore accounted for 59.6% of revenue, while futures revenue stood at ₹114 crore. Ebitda rose by 32% to ₹270 crore, while net profit increased by 29% to ₹197 crore.
This performance underscores the business's operating leverage. Margins stood at 72.2%, slightly higher than the 71.7% a year ago. MCX believes that the Indian commodity market is still nascent compared to global markets. Thus, MCX sees significant scope and opportunities for growth over the next four to five years, based on global benchmarks.
Rising trading volumes and broader participation are likely to create network effects over time. As volumes scale, operating leverage could begin to play out, allowing profitability to grow faster than revenues. The company already reports strong return metrics, with RoCE (42%) and RoE (34%), reflecting capital efficiency and the operating leverage MCX possesses.
Margin for error
At ₹10,795 per share, MCX is trading at around 79 times its price-to-earnings multiple, leaving little valuation comfort. In contrast, BSE is valued at roughly 63 times earnings. This highlights that MCX continues to command a premium, driven by its dominant market position, but also raising sensitivity to any slowdown in growth or execution.
Regulatory oversight also remains stringent, particularly after past operational disruptions. Any prolonged system failure, such as the outage on 28 October, would have reputational and financial implications, given the exchange's role as critical market infrastructure.
Note that MCX experienced a system failure in October, which halted trading for more than four hours. This was the second such incident after a similar malfunction in July 2025.
Increased regulatory scrutiny and restrictions on F&O volumes could create risks. There is also a concentration risk. Bullion and energy account for a large share of overall turnover, leaving the exchange exposed to changes in trading behaviour.
While competitive intensity is currently limited, it could resurface if regulatory conditions change or if alternative platforms gain traction in specific product segments.
For more such analysis, read Profit Pulse.
Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.
The writer does not hold the stocks discussed in this article.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
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