Indian Energy Exchange shares up 6% on Oct power market update; analyst views on IEX

Shares of Indian Energy Exchange Ltd (IEX) jumped nearly 6 per cent in Monday's trade after the  trading platform for physical delivery of electricity, renewables & certificates, said its total electricity volume jumped 21 per cent to 9,260 MU in October. IEX told stock exchanges that it recorded 9,483 MU overall volume, including 217 MU-equivalent 2.17 lakh Renewable Energy Certificates and 5.8 MU-equivalent 5,814 Energy Saving Certificates (ESCerts). The overall volume traded in October climbed 18 per cent on a YoY basis.

Following the development, the IEX stock rose  5.68 per cent to hit a high of Rs 134.85 on BSE.

IEX said its Day-Ahead Market (DAM) volume climbed 8.3 per cent YoY to 4,742 MU in October from 4,379 MU YoY. It said its Real-Time Electricity Market (RTM) volume rose 6.1 per cent YoY to 2,402 MU from 2,265 MU YoY. Besides. Day Ahead Contingency and Term-Ahead Market (TAM), comprising of contingency, daily & weekly and monthly contracts up to 3 months, traded 1,911 MU in October, up 207.6 per cent YoY.

The energy exchange was also recently in the news after the company reported a beat on Ebitda and profit. But analysts largely are neutral n the stock.

"With structural shifts in power pushing volumes towards long-term PPAs coupled with the risk of market coupling, we argue IEX faces challenges to medium-term growth as it reinvents products to

navigate competition. We find limited upside despite 15–19 per cent volume growth over FY24–26E (versus 10 per cent 1H FY24), and 12 per cent thereafter," said Nuvama Institutional Equities as it suggested a target of Rs 110 on the counter.

Antique Stock Broking has maintained its 'SELL' recommendation on IEX. It said structurally, aggressive renewable energy addition leads to evening base and peak load deficit. Volumes will shift to bilateral markets, it said.

"The role of an exchange in an MBED era, if that ever happens, is unclear. Coupling regulations, which could be on the cards, will stabilise the market share of exchanges. Spot prices could be favouring volume growth in the near term. However, the big structural volume growth drivers are missing. We retain SELL on IEX with a TP of Rs 102," said Antique Stock Broking.

If spot rates (exchange rates for electricity) are lower than bilateral (like PPA) rates, volume shifts to exchanges. On the contrary, if spot rates are higher, there is more incentive for DISCOMs to chase bilateral contracts.

 

 

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