India's Multi Commodity Exchange tanks after extending IT contract at higher cost (updated)

63 Moons Technologies

30/06/2023 06:39

(Updates with background about contract details with 63 Moons
and TCS in paragraphs 3 and 5; comments from MCX and 63 Moons in
paragraphs 4,7 and 8; analyst comment in paragraph 6, share
details in paragraphs 9 and 10)
       BENGALURU, June 30 (Reuters) - Shares of Multi Commodity
Exchange of India (MCX)  MCEI.NS  tanked as much as 14% on
Friday after the company, late on Wednesday, extended the
services of software vendor 63 Moons Technologies  63MO.NS  for
six months at a higher cost.
    The company renewed the contract for 1.25 billion rupees
($15.24 million) per quarter, beginning July 1, compared with
810 million rupees in the previous renewal and 600 million
rupees before that.
    63 Moons Technologies's long-term contract ended last year.
The commodity exchange MCX had selected Tata Consultancy
Services (TCS)  TCS.NS  as its new service provider in 2021.
    MCX is better prepared to migrate to the new commodity
derivatives platform, the company said in a statement on
Wednesday, adding that MCX decided to extend the support from 63
Moons to ensure necessary compliances.
    MCX's transition to the TCS-run platform has been delayed,
despite the company assuring analysts and its investors that the
transition would take place by end-June.  
    The delay will impact new product launches as well as an
increase in foreign investor participation, Motilal Oswal
analysts said in a note, cutting their earnings per share
estimate by 69% for fiscal 2024.
    Meanwhile, 63 Moons said in a statement on Thursday that the
software company had "once again agreed to the eleventh-hour
request by MCX."
    "We sincerely wish that this ‘last time’ really happens
someday," 63 Moons said, adding that MCX has not opted for an
offer to purchase software source code.
    Shares of 63 Moons rose 11.6% on the contract renewal.
    MCX shares, which are down about 5% so far this year, were
last down 10.1%.
    
($1 = 82.0170 Indian rupees)

 (Reporting by Sethuraman NR in Bengaluru; Editing by Janane
Venkatraman)
 ((Sethuraman.NR@thomsonreuters.com; (+91 9945291420); Reuters
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))