Investec has initiated a ‘Long’ call on Indian Energy Exchange (IEX), with a price target of ₹215/share, representing a potential upside of 6.2% from the current market price of ₹202.49/share. The stock recently witnessed a 17% drop over the past two days, primarily due to media reports regarding the upcoming submission of a simulation report by Grid India, which will play a key role in determining the CERC’s timeline for market coupling.
While there are no clear insights into when the notification will be issued, Investec believes that the operational implementation of market coupling could be a lengthy process, potentially taking up to two years. This may limit the immediate benefits to the power trading ecosystem.
Despite the recent stock volatility, Investec remains optimistic about IEX’s performance, forecasting a 44% overall volume growth and a 17% core volume growth (excluding REC) for Q2FY25. This is expected to drive a robust EBITDA growth of over 30% YoY for the quarter.
While additional clarity on market coupling may emerge during IEX’s Q2 results, the timeline for operational implementation ensures that near-term earnings remain stable. Moreover, the valuation has corrected, with IEX trading at 35x P/E for FY26e, down from 45x previously, offering a more attractive entry point compared to other exchanges.
