The shares of Indian Energy Exchange Limited reached its new 52-week low of Rs 133.85 in the early hours of Tuesday. After a day off, the shares started on a weak note again on Thursday and were trading at Rs 139 levels.
The shares declined after the company reported a decline of 7 percent in its net profit which stood at Rs 70 crores down from Rs 77 crores in the same period the previous year. Their revenue from operations in the period also declined to Rs 95 crores from Rs 110 crores Year on Year (YoY).
The stock has been on a downtrend for quite some time now. On a year-to-date basis, the stock has declined by 47 percent from Rs s 258 in January to the current levels.
The stock reached its 52-week high of Rs 303.80 in December last year. Currently, it is trading at a discount of 53 percent from those levels.
In India, there are three Power exchanges. Power Exchange India (PXIL) and Indian Energy Exchange Limited (IEX) are the oldest which started operation in 2008, while Hindustan Power Exchanges (HPX) commenced its operations in July 2022.
All these years, IEX has been considered a Monopoly company as it has a robust ecosystem and a strong market share compared to its competitors. Also, it was the only company to be listed on the Indian stock exchanges among its peers.
The company addressed the loss by saying that the loss is temporary. Supply-side constraints led the volumes to move from Day-Ahead-Market (DAM) to Day-Ahead Contingency (DAC).
Secondly, the exemption of transmission charges created an anomaly, leading to a shift in volumes from Day-Ahead-Market (DAM) to Term-Ahead-Market (TAM).
Here’s what analysts have to say about the company:
“In our view, breaking IEX’s network effect is difficult for HPX and PXIL, and incentives offered by them are momentary and unlikely to create any significant dent in IEX’s market share – premature to write off IEX’s monopoly,” said Edelweiss Securities Limited.
A note from ICICI Direct highlighted, “For the past year, IEX remained richly valued given its clean balance sheet, but was unable to garner volumes due to unfavorable macros.”
Indian Energy Exchange Limited currently has a 90 percent market share in the power exchange market in India.
Written by Anoushka Roy
