IEX Dominates Market, Faces Regulatory Headwinds

As of January 31, 2026, the Indian Energy Exchange (IEX) has demonstrated sustained market leadership, securing 83% of electricity volumes in the first nine months of FY26. This figure compares favorably to its 88% share in FY23 and 84% in FY24-25. Brokerage firm Motilal Oswal has maintained a 'Neutral' rating on IEX, setting a price target of ₹142 per share, suggesting a potential 12% upside from current trading levels.

Motilal Oswal's assessment comes after IEX reported its December quarter results. The company achieved standalone revenue of ₹140 crore and EBITDA of ₹120 crore, aligning with market expectations. Traded electricity volumes reached 34.1 billion units, meeting forecasts, while standalone profit after tax exceeded estimates by approximately 5%, boosted by higher other income. Electricity volumes saw an 11.7% year-on-year increase during the quarter, though renewable energy certificate volumes declined by 30%.

However, the brokerage flagged potential challenges stemming from the Central Electricity Regulatory Commission's (CERC) announcement on phased market coupling, starting with the Day-Ahead Market (DAM). This segment accounts for about 38% of IEX's volumes in 9MFY26. Motilal Oswal has revised earnings estimates downward, factoring in potential volume declines and reduced transaction fees in the DAM segment, now projecting a modest volume CAGR of 7% (excluding RECs) for FY26-28.

Despite these concerns, IEX's dominant market share and management's guidance for 15-20% volume growth offer potential upside. The market coupling for DAM, initially targeted for January 2026, has not yet been implemented, indicating a potentially longer rollout period. Key factors to monitor include operational challenges in market coupling, the roadmap for real-time market coupling, and intensifying competitive dynamics. The stock is trading near its 52-week low, having declined 28% over the past 12 months, with market coupling remaining a significant overhang.