IEX share price: Power exchange IEX’s share price crashed 15% in trade on Friday, touching a fresh 52-week low of Rs 116 apiece. On Thursday, the Ministry of Power announced its decision to permit market coupling and requested the Central Electricity Regulatory Commission (CERC) to begin the process. Market coupling ensures that the price discovery would occur outside of the power exchanges, which will lead to a uniform market clearing price, effectively threatening IEX’s dominance and business moat.
There are three key power exchanges that function across the country, Indian Energy Exchange (IEX), Power Exchange India (PXIL) and Hindustan Power Exchange (HPX); the price of power differs on every exchange. IEX holds market dominance, around 90% of the power traded occurs on this platform.
Brokerages: Reduce IEX
The brokerage added that it saw multiple near-term headwinds for IEX. The rising competition and the high power price-driven shift in power volumes away from spot market to longer-duration instruments will affect the company’s bottom line. For the period FY24-30E, Nuvama factored in a volume CAGR of 16%.
“IEX is an Indian electronic system-based power trading exchange regulated by the Central Electricity Regulatory Commission (CERC). The stock has been a laggard since the last 15 odd months. Stock prices tumbled in the last couple of sessions after the reports said that the power ministry has directed the CERC to undertake the ‘Market Coupling’ mechanism for spot power trading. Technically speaking, we do not see any near term relief in the prices as the decline is backed by humongous volumes. The stock is trading at new 2-years low and hence, we advise traders to stay away from the stock till the time things do not stabilise,” said Sameet Chavan, Head Research, Technical and Derivatives, Angel One.