Shares of Indian Energy Exchange
Likely to face near-term headwinds from three factors which are i) Implementation of market coupling, ii) high power price-driven shift in power volumes away from spot market to longer-duration instruments, iii) rising competition.
While mentioning the above factors, Nuvama Institutional Equities has maintained a 'REDUCE/SU' stance on the stock with an unchanged target price of Rs 127.
The brokerage's views come after the IEX, stock slipped 9% in the last 30 minutes of trade on Thursday. The sudden crash occurred amid reports that said the power ministry has directed Central Electricity Regulatory Commission (CERC) to implement the process of market coupling in a timely manner.
"Currently, IEX, is the most trusted platform for electricity spot price determination in India, which is its business moat. However, introduction of a full-fledged market coupler implies an independent third-party will collate all buy/sell bids and derive a uniform market price across all exchanges. This potentially negates IEX, 'moat' as other exchanges can eat into its market share over time," said Nuvama in a note.
In Thursday's trade, IEX stock hit an intraday low of Rs 135.40, down 8.97% against the previous close of Rs 148.75 on BSE. Later, the stock closed 8.24% lower at Rs 136.50 on BSE.
In terms of technicals, the relative strength index (RSI) of IEX, stands at 36.8, signaling it's trading neither in the overbought nor in the oversold zone. The stock has a beta of 1, indicating low volatility in a year. IEX, shares are trading lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Total 22.95 lakh shares of the firm changed hand amounting to a turnover of Rs 32.32 crore on BSE. Market cap of the firm fell to Rs 12,266 crore
Market cap of the firm fell to Rs 12,266 crore
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Share of Indian Energy Exchange (IEX) plunged 15 percent in Friday's trade amid concerns over structural volume growth drivers ahead. If one were to go by Antique Stock Brooking, the stock could see a further 10 per cent downside ahead.
Antique said spot market prices will be higher than bilateral prices, unlike in the past which was favourable for exchanges. It said the possibility of a coupling operator can net the power flow within each zone, posing a new challenge for dominant exchanges like IEX, Besides, it noted that incentives by competitor exchanges such as HPX and PXIL can eat into volume growth of IEX
"With the current market price dissociated to underlying changes, we downgrade IEX to sell," the brokerage said in a note. Antique Stock Broking downgraded the stock on a day it plunged 14.98 percent to hit a low of Rs 116.05 on BSE.
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