IEX extends rally with 5% gain as Street cheers Oct performance, Q2 results

After reporting positive numbers in the second quarter of 2023-24, the rally in the IEX share price continued, gaining over 5 percent as the energy exchange achieved 9,260 MU of total electricity volume in October 2023.

As of 11.55am, the shares of IEX were trading at Rs 133.80, higher by 4.6 percent from the closing price of the previous session on the NSE.

The total electricity volume registered an increase of 21 percent on-year. IEX achieved 9,483 MU of overall volume, including 2.17 lakh Renewable Energy Certificates (RECs) which are equivalent to 217 MU and 5,814 Energy Saving Certificates which make up 5.8 MU.

In October, the country’s energy consumption reached 139 billion units as a result of increased consumption, below-average rainfall and a lower base in the same period last year. “This upsurge in power demand prompted discoms to actively purchase power on the exchange to meet the increased demand, thereby leading to a significant increase in trade volumes on IEX,” IEX said in a filing with the exchanges.

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On November 2, IEX posted its second-quarter results. The company reported a 21.4 percent on-year increase in consolidated net profit at Rs 86.5 crore. The power trading platform’s revenue increased 14 percent to Rs 108.5 crore.

Brokerages bearish

As Q2 number came in higher than estimates, Bernstein maintained its ‘underperform’ call with a target price of Rs 95 per share, citing the ongoing updates regarding regulatory concerns.

“With rising power prices, volume growth is clearly shifting away from DAM (spot market), wherein IEX has a monopoly, to TAM (term ahead /long term), which has higher competition from other exchanges/ traders,” Nuvama Institutional Equities said.

Bernstein agreed to this view, adding that the switch from TAM to DAM does not seem to have happened.

Nuvama added that it sees limited upside despite a 15–19 percent volume growth over FY24–26 (versus 10 percent in 1H FY24), and 12 percent thereafter. The brokerage retained its reduce call with a target price of Rs 110 apiece.

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