Indian Energy Exchange (IEX) is the dominant exchange in India for trading
electricity in the country. It has a market share of over ~98% of the volumes in the
power exchange industry.
Outlook & Valuation: IEX is likely to continue its current growth trajectory as
the short-term electricity market would continue its migration away from other
platforms and to the exchanges. The company is also likely to sustain its
position as the dominant market player. The company is also likely to benefit
from long-term industry trends as the Indian power market moves towards
global standards. The company has an ROE of 30.8% Vs 7.4% for Multicommodity
Exchange (MCX), based on FY18 annualized earnings. At the
upper end of the price band, the pre issue P/E multiples works out be 40.9x
of FY2018 annualized EPS or IEX,Vs 51.5x of FY2018 annualized EPS for
MCX. We recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term
period.
