IEX shares hit 52-week low. Brokerages have 'Hold' rating post Q2 results
2 min read . Updated: 25 Oct 2022, 12:27 PM IST
Premium- The brokerage house has changed its rating on IEX shares to Hold from Buy
Shares of Indian Energy Exchange (IEX) hit 52-week low level of ₹133 apiece on the BSE in Tuesday's opening deals after the company reported a 7% fall in its consolidated net profit at ₹71 crore in the September quarter (Q2 FY23) of the current fiscal as compared to ₹77 crore in the year ago quarter.
“IEX posted an in-line quarter at an operating level, but a 10% beat on PAT due to higher treasury income. Exchange volumes were hurt due to supply-side constraints. This resulted in higher price discoveries affecting volumes, especially DAM (down 30% in H1). Additionally, there is volume shift to products where IEX has lower market share," said brokerage and research firm Edelweiss.
Overall, the recent market share loss is temporary in Edelweiss' view and it would wait for extensive time series data before writing off IEX’s monopoly status. “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. We await volume ramp up in new products and restoration of supply side constraints," the note stated. Edelweiss has maintained its Hold rating on IEX shares with a 12 month target price of ₹150 apiece.
“For the past year, IEX remained richly valued given its clean balance sheet, but was unable to garner volumes due to unfavourable macros," said brokerage ICICI Direct in a note. It has changed its rating on IEX shares to Hold from Buy with a 12 month target price of ₹155 apiece.
Key triggers for future price performance, as per ICICI Direct, could be the introduction of longer duration delivery base contracts in power exchanges, launch of Hindustan Power Exchange which will increase the competition and may negatively impact its volumes and launch of National Open Access Registry and derivatives contracts in H2FY23.
Indian Energy Exchange (IEX) is the premier electricity exchange in India, which facilitates trading of electricity and commands a market share of 85-90% in the power exchange market.
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