Indian Energy Exchange (IEX IN) – Company Update – Awaiting outcome of Aptel hearing – HOLD
Published on 01 Feb 2026
Indian Energy Exchange (IEX) reported steady 3QFY26 performance, with overall volumes growing 9% YoY, driven by a 12% YoY increase in power volumes—which account for ~95% of total volumes—partly offset by a sharp 30% YoY decline in REC volumes. The low-teen growth in power volumes came despite muted national power demand (-1% YoY), supported by softer short-term power prices. IEX continues to benefit from a cash-rich balance sheet (cash of ~Rs15bn in Q3FY26, ~13% of market capitalization), negligible capex requirements and high RoE (~40%); however, the proposed market coupling mechanism poses a key overhang on its near-monopoly position in the DAM segment (~40% of its volume) of exchange. We model power volume growth (ex-REC) of 15%/9%/11% in FY26E/FY27E/FY28E, assuming a gradual decline in DAM market share to 85% in FY27E and 70% in FY28E, while maintaining power segment margins at ~Rs0.04/kWh. Following the CERC’s Jul’25 order mandating centralized price discovery for DAM, IEX has appealed to APTEL, with the hearing concluded and an order expected by Q4FY26. Given the expected moderation in volume growth to ~10% CAGR over FY26–28E from ~20% CAGR over FY20–25, we believe IEX is likely to trade at a lower valuation multiple versus historical levels. Accordingly, we have ‘HOLD’ rating with TP of Rs135, based on 20x FY28E EPS.
