Theoretically, it can be deduced that the market share of Indian Energy Exchange (IEX) will decline to 33.33% in due course of time with the implementation of market coupling, JM Financial said in a press note issued on July 30
After a 50% crash form the peak, IEX bounces back 10%, but market insiders say funds may be averaging to exit, not buying into value
According to experts, the market coupling development could significantly impact IEX's revenue and margins going ahead.
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.
Implentation of market coupling would mean there will be only one price for electricity traded through the exchanges at any point of time.
IEX Share Price: Reports suggested that as part of the first phase of the new regulations, the Day-Ahead Market (DAM) will be coupled by January 2026.
India's peak power demand touched 243 GW this year, much lower than the previosuly projected 270 GW. Senior power ministry officials now expect to see the current year's peak power demand in September, courtesy an early onset of monsoon and pre-monsoon rains during summers.
In the initial months after the launch of electricity futures, the exchange will not charge a per transaction fee.
MCX share price: While MCX shares gained following the latest news, its rival Indian Energy Exchange (IEX) saw its share price decline by nearly 1.5%.
The mechanism of market coupling will ensure buy and sell bids from all power exchanges in India will be aggregated and matched, in order to discover a uniform clearing price, which will result in only one price for the electricity that is to be traded through power exchanges.
With the monsoon arriving sooner, the Ministry of Power plans to reassess its peak power demand projections for this year, which are currently pegged at 270 GW.
IEX continues to reinforce its market leadership with an 83-84 percent share in electricity trading, benefiting from India's increasing power demand and regulatory support. The company is expanding into new trading platforms, including the Indian Gas Exchange (IGX), international carbon exchange, and coal exchange, further strengthening its moat. The anticipated 25% volume growth in FY25, coupled with supportive regulatory environment and a robust balance sheet, IEX offers good growth visibility. Despite regulatory risks, IEX's diversification into newer markets ensures continued competitiveness and earnings visibility.
IEX Share Price: In February, IEX's electricity traded volume increased by 9 percent on-year to 9,622 million units for the month.
A favourable industry environment and new ventures like coal exchange position IEX well, making it one of the safe bets in the current environment
Strong volume growth, product diversification, and RE opportunities fuel the performance of the exchanges.
Motilal Oswal recommended Neutral rating on IEX with a target price of Rs 200 in its research report dated October 27, 2024.
