The shares of India’s leading power trading platform provider gained traction this week after UBS brokerage gave an upside of 41 percent on the company shares.
On Friday, Indian Energy Exchange Ltd shares were trading at Rs 142.65, down 1.65 percent from the previous close on the National Stock Exchange. The company has a market capitalization of Rs 12,724 crore.
The company’s shares have delivered a return of 6.3 percent in the last five days and 16.5 percent in a year.
The company’s revenue climbed by 14 percent year on year, rising from Rs 95 crore in Q2FY23 to Rs 108 crore in Q2FY24. During the same period, net profit increased by 17 percent from Rs 70 crore to a profit of Rs 82 crore.
UBS has revised a ‘buy’ rating on Indian Energy Exchange Ltd to a target of Rs 200 per share from Rs 185 per share, for an upside of 41 percent based on Friday’s trading price of 142.60 per share.
The rationale behind providing such a recommendation is
● UBS has increased the estimates by 3% based on favorable market situations. Supply-side bids in the DAM (day ahead market) market are improving, and increase in volume trading.
● Brokerage expects higher volume which is likely to sustain with meaningful moderation in international coal prices and expects market shift reversal from bilateral transactions to exchange.
● UBS expects improving the supply situation and softening merchant power prices would be a positive for the Indian energy exchange.
● DAM will be supported by Gross Network Access rules beginning in October 2023, UBS reported. Higher trading volume to support the IEX stock as during Q3TD, the volume is up 15-17%.
Indian Energy Exchange Ltd provides an automated platform and infrastructure for carrying out trading in electricity units for the physical delivery of electricity.
Indian Energy Exchange (IEX) is the premier electricity exchange in India, which commands a market share of around 98 percent in the power exchange market.
In the recent shareholding pattern, foreign institutional investors hold a 14.12 percent stake in the company, while domestic institutional investors hold a 22.62 percent stake in the company.
Written by Omkar Chitnis
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