Indian Energy Exchange (IEX) share price gained over 3% on Monday, reversing some of its losses witnessed in the previous sessions. The stock price rose as much as 3.5% to an intraday high of ₹126.90 apeice on the BSE.
IEX stock had plunged more than 17% in the previous two sessions after the Power Ministry ordered the Central Electricity Regulatory Commission (CERC) to implement the ‘market coupling’ method for spot power trading.
However, IEX share price received buying interest after global brokerage house UBS maintained a ‘Buy’ rating on the company with a target price of ₹200.
UBS expects no change to existing structure due to simple market coupling, but may impact operations of power exchanges.
Market coupling refers to the forming of a single power trading entity for price discovery which is owned by the government with power getting dispatched to short-term power trading platforms.
IEX is a dominant player in the industry and has the biggest volume of power trading. The introduction of market coupler is likely to significantly reduce volumes for IEX with other powerful trading platforms taking away IEX’s moat, analysts said.
Basant Maheshwari, in a YouTube video, said that the stock will underperform for a long time as its business model has been permanently damaged. He does not expect the company to earn the same amount of profits as it used earlier.
Market coupler will mean that an independent third-party will collate all buy/sell bids and derive a uniform market price across all exchanges.
Nuvama Institutional Equities had said that the move of the Ministry of Power has a big negative impact for IEX.
“This potentially negates IEX’s ‘moat’, as other exchanges can eat into its market share over time. We reiterate our braveheart ‘reduce’ rating on the stock with a target price of ₹127,” said the brokerage in its report.
IEX stock has also entered the F&O ban list on Monday.
At 10:50 am, the shares of IEX were trading 1.47% higher at ₹124.40 apiece on the BSE.
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Updated: 12 Jun 2023, 10:52 AM IST