Stormy rise in IEX shares, JM Financial said buy it
Today, a special movement was seen in the stock market and that was the tremendous jump in the shares of IEX i.e. indian Energy Exchange. The company's shares climbed by about 6 percent. The reason for this was the report of JM Financial, in which they have given a BUY rating on IEX and have set a target price of Rs 231 for it. That is, an increase of about 14 percent is expected from the current price.
Rising electricity demand, opportunity for IEX
JM Financial's report says that the demand for electricity in the country is continuously increasing and along with this, exchange based transactions are also increasing rapidly in the market. Between FY25 and FY28, the volume traded on IEX can grow at the rate of 13 percent annually. Due to this, the company's earnings and profits are also expected to increase by 14-16 percent.
Tremendous growth in short-term power market
The short-term electricity market, which currently accounts for only 7% of total electricity generation, is growing at a rate of 18%, while the total demand is growing at a rate of only 5-6%. JM Financial believes that due to the increasing share of renewable energy (RE), new tools like virtual PPA and changing weather, many states are turning to buying short-term electricity. In this environment, IEX can benefit the most as it already covers 84% of this market and is constantly adding customers through new products and better technology.
Discussion of market coupling, but relief for now
The report also states that regulators (such as CERC) are thinking of introducing market coupling, so that the supply and prices of electricity can be controlled centrally. But according to JM Financial, market coupling will not be fully implemented in the near future, which is a relief for IEX.
IEX business Model and Strengths
IEX is not just an electricity trading platform but also offers several innovative products such as RE Certificates and Energy Saving Certificates. It continues to maintain its leadership with 84 per cent market share and over 7,900 participants. In FY24, IEX crossed the 100 BU (billion units) mark for the first time. In May, the company traded electricity volumes of 10,946 MU, up 14 per cent over the previous year. The Real-Time Market (RTM) recorded its highest ever monthly trading volumes, up a whopping 42 per cent.