IEX Share Price Analysis
The shares of Indian Energy Exchange (IEX) are currently facing significant selling pressure for the second consecutive day. On September 24, 2024, the stock experienced a steep decline of over 12% during intra-day trading, ultimately closing down more than 11% for the day. This downtrend continues today, with shares again slipping more than 5% intra-day. As of now, IEX shares are trading at Rs 203.65 on the BSE, reflecting a drop of 3.76%. Earlier, the stock hit a low of Rs 199.45, marking a 5.74% decline during trading hours. Over the span of two days, the shares have weakened by approximately 16%. Prior to this, on September 24, 2024, IEX shares reached a one-year high of Rs 244.35, contrasting sharply with the one-year low of Rs 121.30 that was recorded about 11 months ago on October 26, 2023.
Factors Driving the Decline
The recent downturn in IEX shares can be attributed primarily to the news regarding the potential implementation of market coupling, as reported by government sources to CNBC-TV18. Although the timeline for this implementation remains unspecified, the mere suggestion has triggered a notable sell-off in the stock. Market coupling refers to a pricing model whereby the prices for electricity are unified across different power exchanges by merging the buying and selling bids, resulting in standardized electricity prices.
Market Coupling Overview
According to a Central Electricity Regulatory Commission (CERC) document from February 2024, market coupling is slated for a four-month trial period before becoming fully operational. The initial phase will involve the development of necessary software on Grid India. During its June quarter earnings call, IEX acknowledged that the software was still under development and could face delays; the company also indicated there weren’t any clear benefits detected from market coupling at this stage.
Brokerage Firms’ Perspectives
Analysts from various brokerage firms have expressed concern regarding the potential implications of market coupling on IEX’s market share and earnings. Elara Securities estimates that IEX’s market share could plummet from 84% to 70% by FY27. Additionally, IIFL’s analysis suggests that earnings per share (EPS) for IEX might drop by 25% in FY26 due to the impact of market coupling.
Market Ratings
| Brokerage Firm | Rating |
|---|---|
| Motilal Oswal | Neutral |
| Elara Securities | Potential Decline |
| IIFL | Negative Outlook |
Conclusion
The combination of selling pressure from market concerns and the uncertainty surrounding the regulatory changes has created a challenging environment for IEX shares. While some analysts hold a bullish view, citing potential long-term gains following market adjustments, others are more skeptical, highlighting the risks posed by potential market share drops and reduced earnings. Investors are advised to monitor these developments closely and consider seeking advice from certified investment professionals before making decisions.
Disclaimer: The views and opinions expressed in this article are those of the industry experts and brokerage firms. Moneycontrol does not accept any responsibility for the validity of the information included herein. Users are encouraged to consult with certified experts before proceeding with any investment decisions.
