The Indian Energy Exchange (IEX) has been negatively impacted by the Ministry of Power’s recent move towards market coupling. Basant Maheshwari has advised investors to seek guidance from their financial advisors before making any investment decisions,
According to market expert Basant Maheshwari, a company’s balance sheet can be negatively impacted by a flawed business model, and conversely, a strong business model can improve a balance sheet that was previously weak. In a widely-viewed YouTube video, Maheshwari highlighted the Ministry of Power’s recent move towards market coupling, which could potentially undermine the dominance of the Indian Energy Exchange (IEX) and “puncture its business model”. The video has already garnered 60,000 views.
According to Maheshwari, the recent selloff of IEX stock may entice investors due to the significant decrease in the stock’s price-to-earnings ratio from 80 times to 45 times, as well as the drop in share price from Rs 250 to Rs 125. Additionally, the market cap-to-sales ratio has decreased from 60 times to 25 times, and the EV/Ebitda ratio is now considered reasonable.
According to the speaker, these stories serve as a means of self-comfort. When a company encounters a persistent issue like this, it can take months or even years for the stock to rebound, in my opinion. According to Maheshwari, a financial expert, the IEX stock is expected to experience significant underperformance in the future. He advises investors to seek guidance from their financial advisors before making any investment decisions. It is important to note that Maheshwari’s statement is not intended to be taken as a recommendation to either buy or sell the stock.
According to Maheshwari, a popular YouTuber with 171,000 followers on the channel ‘bmtheequitydesk’, minority investors must question whether the company’s business model and prospects will remain unchanged. According to him, if the response is negative, it is advisable to proceed to the next option.
SPOTLIGHT
In the past month, shares of IEX have fallen by 21%, indicating a bearish trend in the market. Over the past year, the stock has experienced a significant decline of 30%. Last week, Antique Stock Broking recommended a target of Rs 105 for the stock. According to sources, the growth of IEX’s volume may be impacted by incentives offered by competing exchanges like HPX and PXIL.
Possible journalistic rewrite: Possible coupling regulations may help stabilize the market share of exchanges. The current state of spot prices continues to exceed that of bilateral prices, posing a challenge for the replication of the previous period’s high volume growth. According to Antique, there are no significant structural volume growth drivers to be seen.
The stock in question is of antique origin. According to Broking, there has been a shift in volume towards exchanges in instances where spot rates for electricity exchange are lower than bilateral rates, such as in the case of Dadri-I with Delhi DISCOMs or Barh with Bihar DISCOM. In contrast, higher spot rates provide greater motivation for DISCOMs to pursue bilateral contracts. According to a recent report, the Central Electricity Regulatory Commission’s (CERC) May 2023 approach paper has advocated for the continuation of bilateral contracts for aging power plants.
According to Maheshwari, IEX previously held an 80% market share. However, in critical sectors like power, when a company becomes a dominant player, government intervention is inevitable. According to Maheshwari, the market has already factored in the proposal and discounted it.
According to the source, if the government does not change its course, the stock is likely to be affected. However, the source does not anticipate a change in the government’s position.
