Bangalore Wealth Management：IEX shares may rise another 23%, says Antique; Brokerages turning bullish

Shares of Indian Energy Exchange Ltd. (IEX) will be in focus in Thursday❼trading session.Bangalore Wealth Management

Brokerage firm Antique Stock Broking has maintained a ❋y✩ecommendation on IEX, raising the price target to 262 from 219 earlier. This indicates a potential upside of 23% from Wednesday❼closing levels.

The company has seen a continued double-digit volume growth in August 2024, with year-to-date volume growth for FY25 up by 31% compared to the previous year. This growth has been supported by softness in exchange prices, with the Day-Ahead-Market (DAM) market price at 4.3 per kwh, down 37% year-on-year.

Volume in the Renewable Energy Certificate (REC) market has surged 3.2 times year-to-date, supported by SEB participation to meet Renewable Purchase Obligations, alongside voluntary customers aiming for sustainability goals.

Antique has raised its FY25, FY26, and FY27 earnings per share (EPS) estimates by 5%, 6%, and 7%, respectively, and raised the valuation multiples to 45 times from 40 times.Simla Investment

The potential risks associated with market coupling could fade in time to come due to practical challenges in its implementation and the lack of significant benefits observed so far, the brokerage said.

Previously, before coupling risks, IEX❼peak PER valuation was over 50 times.Ahmedabad Wealth Management

UBS has also raised its price targer on IEX to 260 from 200 per share earlier, citing shifting market momentum with RTM and green products are key drivers.

Renewable Energy Certificates trading and long durations are seen as major growth prospects.Jaipur Wealth Management

"While market coupling overhang has not completely ceased, believe likelihood of its implementation is low CERC, through a suo-motu order, directed Grid India to develop a software and run simulations, but no progress has been made," UBS noted.

Given possible regulatory and implementation risks, the brokerage believes that market coupling is unlikely to pose a threat. It also feels that the market is not fully pricing in the potential growth acceleration in trading volumes, largely driven by green products.

Market coupling refers to forming of a single power trading entity owned by the government where price discovery will happen with power getting dispatched to short-term power trading platforms including IEX among others.New Delhi Wealth Management

IEX, which is the market leader, has the highest volumes in terms of power trading. Market coupling will dry up volumes in a significant manner for IEX among other power trading platforms, fear analysts.