IEX - Indian Energy Exchange Limited Share Price

The management of Indian Energy Exchange Limited (IEX) provided an optimistic outlook during the Q1 FY '26 earnings conference call, reflecting confidence in the ongoing economic growth in India, projected at 6.5% for FY '26. They emphasized the strong demand in the power sector, citing peak summer power demand of 242 gigawatts in June 2025, which was met without shortages due to governmental support measures.

Key forward-looking points highlighted by management include:

1. Growth in Power Demand: Despite a 1.3% decline in power consumption for Q1 FY '26 compared to the previous year, the Central Electricity Authority (CEA) projects a 6% annual growth in power demand until 2032, driving potential exchange volume growth.

2. BESS Projects: The Ministry of Power is facilitating Battery Energy Storage Solutions (BESS), with 47 gigawatts anticipated by FY '32, increasing investments in energy storage and enhancing market participation.

3. Regulatory Support: Recent regulatory amendments, including the revised Shakti Policy for coal allocation, aim to improve liquidity and transparency in the power sector, helping to ensure sufficient fuel supply for thermal generators.

4. Market Coupling Implementation: Management expressed anticipation for market coupling in the Day Ahead Market (DAM), scheduled for January 2026, potentially improving price discovery and participation across exchanges.

5. Revenue Growth: For Q1 FY '26, IEX reported revenues of INR 184.2 crores, a 19.2% increase year-on-year, with an expectation for sustained growth driven by increasing trading volumes and liquidity improvements.

6. Renewable Energy Certificates: There was a notable 150% increase in Renewable Energy Certificates traded during the quarter, reflecting stronger compliance with Renewable Purchase Obligations (RPO).

7. Gas Trading Growth: IGX, IEX's gas trading platform, saw a remarkable 109% growth in volumes, indicating robustness in the gas market driven by demand.

The management's confidence reflects a proactive approach towards leveraging regulatory changes and market dynamics, laying a solid foundation for sustained future growth.

Here are the major questions and detailed answers from the Q&A section of the earnings transcript:

1. Question: "Could you refresh us regarding the advantages that IEX has over its competitors, which helped it to have a near 100% market share in the DAM and RTM segments?"

   Answer: "I can confidently state that our longstanding leadership in both the Day Ahead Market (DAM) and Real-Time Market (RTM) is due to various factors. We boast a robust technology platform, proactive customer engagement, and effective data analytics support. Our commitment to customer service has cemented our relationships, giving us over 95% market share despite competitors initially having up to 25%. We will maintain this dominance by continuing these efforts post-market coupling."

2. Question: "What percentage of volumes overall for IEX and specifically in the DAM market does PTC India as a trader member contribute?"

   Answer: "PTC India, as per power market regulations, holds over 5% equity in a competitor exchange, limiting its trading capability on that exchange. Currently, PTC contributes about 10-12% of the overall trading volumes on the IEX platform, allowing us to maintain a sizeable market share without its full participation in the competitive exchange."

3. Question: "Do you see competition using transaction fees as a tool to gain market share in the Day Ahead Market post market coupling?"

   Answer: "Transaction fees are indeed a small part of overall power procurement costs, and while competitors might attempt to undercut prices, we believe customers value our technological edge and service quality over minor financial incentives. We will address any competitive pressure on transaction fees as it arises."

4. Question: "Is the Day Ahead Market also going to include GDAM?"

   Answer: "As of now, the Day Ahead Market is explicitly defined in the current operational structure. The extent of GDAM's integration remains ambiguous, and it isn't explicitly included in the initial market coupling plans."

5. Question: "Based on the current status of technological progress that Grid India might have made, do you foresee the Jan '26 timeline as being implementable for market coupling?"

   Answer: "It's challenging to ascertain. The implementation requires significant groundwork, including a common IT infrastructure across exchanges, legal regulations, and more. Judging from the complexity, I believe we may require more time than the January '26 timeline suggests."

6. Question: "Is there any mention of MBED in the recent market coupling order, and what are the implications?"

   Answer: "There's no mention of Market-Based Economic Dispatch (MBED) in the recent order. Its potential implementation is not currently anticipated, as the focus remains on establishing market coupling among the exchanges first before considering MBED."

7. Question: "What explains the sharp increase in gas volume in the quarter and the sustainability of this number going forward?"

   Answer: "The increase in gas trading volumes is primarily driven by domestic gas sales and an uptick in demand from oil marketing companies and refineries. While we saw a notable spike this quarter, sustained improvements will depend on continuing policy support and infrastructure development in the gas sector."

8. Question: "How significant is the recent PNGRB regulation that allows only 2 tariff zones compared to the previous higher zones?"

   Answer: "These regulatory changes are favorable for the gas market. Streamlining to two zones simplifies tariff structures, similar to the power sector's approach. Such changes are steps toward greater efficiency in the gas market, which we anticipate will lead to growth in trading volumes."

Each of these responses provides insights into the company's strategic approaches and perspectives on the evolving power market landscape.