IEX shares shed record 30% in a day; but here's why analysts expect further corrections

the new mechanism aims to unify price discovery across all power exchanges — IEX, Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HPX). Only IEX is the listed player in this segment.

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On Thursday, shares of Indian Energy Exchange (IEX) registered their steepest single-day fall of nearly 30 percent  after the Central Electricity Regulatory Commission (CERC) approved plans to introduce market coupling in January 2026, which, simply put, would lead to the company losing a key competitive edge.

Analysts believe that the latest development could significantly impact the company and the stock as it will have a direct impact on transaction income, which accounts for more than 70 percent of the total income of the listed entity — in Q1FY26, transaction fees made up roughly 77 percent of the firm's income.

Elara Securities' Rupesh Sankhe highlights two key headwinds that IEX faces now - one on the volume side, and the second a likely fall in margin due to competition and entry of other players.

“The DAM (Day-Ahead Market), which makes up 50 percent of IEX’s volume, about 63 billion units out of 121 billion last year is set to be affected from FY27,” says Sankhe adding that if they lose 50 percent market share in DAM, that’s a nearly 25 percent revenue impact and up to 30 percent earnings impact.

The impact doesn’t end there, he adds. “If you assume margins drop from 4 paisa to 3 paisa per unit, revenue and profit will be affected further. Eventually, we could see 40–50 percent decline in earnings. A 30–35% fall in earnings and derating of the PE multiple implies the stock could correct 40–50 percent. Most likely, it will go down further because investors will wait to see how competitors respond," explains Sankhe who sees the stock price correcting further by around 10 percent.

Currently, seven brokerage firms have a buy call on the stock with three each having a hold call and a sell call. As per the latest shareholding pattern, mutual funds hold around 27 percent stake in the firm, with FPIs holding around 15 percent.

Under the new structure, Grid-India will serve as a central agency determining a single clearing price for electricity trades, replacing the current model where each platform conducts its own auction.

This assumed significance for IEX as it historically held over 85 percent share in the day-ahead market. The new framework will be put in place from January 2026.

"Earlier, when things were happening independently, platforms like IEX had an edge in terms of volumes. That edge is now gone. Earlier, participants went to the platform with the largest volume to get the best price. That dynamic is now gone,” said Ashwini Shami, EVP and Portfolio Manager at Omniscience Capital.

Sankhe echoed this sentiment, “The unified infrastructure removes the volume advantage. Now it comes down to services, efficiency, and IT capabilities. IEX may still have some edge in backend advisory and tech infrastructure, but they can no longer count on price control,” he said.

Meanwhile, the new mechanism aims to unify price discovery across all power exchanges — IEX, Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HPX). Only IEX is the listed player in this segment.

“The new structure will involve collecting all bids from the various market operators, after which a central committee will determine the final market-clearing price. Previously, IEX used its own algorithms to match bids and had the authority to set prices. As the dominant player with an 85% market share, IEX attracted most of the bids and had concentrated control over both producers and consumers,” explained Divyam More of Samco Securities.

Analysts believe that eventually one could see a derating in the PE multiple. The current 35–40x PE multiple was given based on strong earnings and monopoly positioning and that premium is likely to go down, they say.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.