thanks everyone for the well-intentioned views. I have decided to wait it out a bit, maybe read and re-read some books on investing, etc in the meantime. I had done extensive homework to see if there is a possibility of MCX involved in similar mess as NSEL. Apart from some strange patterns in Almond contracts back in 2009-10, I did not notice anything worrying. I am pretty confident, that MCX is not involved in illegal financing mess as NSEL. Also note that it is important to waive off delivery/storage charges to run such a financing scam. See the following notice on nsel website for e.g.
No such strange waivers found by MCX.
Now comes the question of margin of safety. What if NSEL defaults, lets say MCX even shuts down. One of the things that I was banking on was 800cr cash on MCX’s balance sheet, this is about Rs. 160 per share. This is excluding margin amounts from traders and MCX-SX warrants. I have no idea how much MCX-SX is worth, so lets put a 0 there.
Could the cash still be on its books? Very likely I think. Not because promoters are honest, but because FMC regulates MCX. It has 4 nominee directors on the board and has given orders on Aug 6 to MCX to inform FMC before doing any financial transaction, not related to routine business. MCX is one company where promoters are not in total control. If promoters go bust, there are rules where FMC will itself choose/nominate another promoter.
Now, what if the cash was already missing before FMC’s Aug 6 order? This is one thing I am not 100% sure of. Another is that the price is still too high to be safe, given the possibility of FT going bust. Below 200 would be pretty safe, provided the cash is there. Also the 400,000 terminals/connections which give MCX its 90%+ market share must be of some value for sure.
Whether the promoters already siphoned the cash before Aug 6 will be clear after Q2 results only. Probably I should wait a bit. In any case, the price is too high to take care of the worst case scenario.