Summary of earnings call for Indian Energy Exchange Ltd published on 01 Aug, 2025

Indian Energy Exchange Ltd
Q1 FY26
Call date · July 25, 2025

1 · Management Commentary

Key Positives

• IEX recorded electricity trading volume of 32.4 billion units, up 15% YoY.
• Revenue grew 19.2% YoY to INR 184.2 crores; PAT rose 25.2% YoY to INR 120.7 crores.
• RTM volumes grew 41% YoY to nearly 13 billion units; Green market volume up 51% YoY to 2.7 billion units.
• Strong growth in Renewable Energy Certificates (53 lakh RECs traded, up ~150% YoY).
• IGX (associate) gas volumes up 109% YoY; PAT at IGX up 86.7% YoY.
• Ample fuel availability, stable/lower coal and gas prices, and improved supply liquidity led to lower power prices.

Key Negatives

• Power consumption in Q1 FY26 was 1.3% lower YoY due to early monsoon and unseasonal rains.
• Uncertainty and concerns around the implementation and impact of market coupling in the Day Ahead Market (DAM).
• Ongoing regulatory changes create ambiguity for future market structure and competitive dynamics.

Forward Guidance

• Awaiting CERC approval for extending Term Ahead Market contract from 3 to 11 months and for Green RTM segment.
• Continued focus on new product development (e.g., Green RTM, peak power, 11-month contracts).
• Monitoring regulatory developments on market coupling, electricity derivatives, and coal exchange.
• ICX (International Carbon Exchange) issued 44 lakh I-RECs in Q1 FY26; awaiting CPCB decision on EPR trading platform.
• Management expects continued volume growth driven by policy support, demand growth, and new market models (battery storage, VPPAs, derivatives).
• No specific capex plans or client wins/losses disclosed.

2 · Q&A Highlights

Q 1 (Composite): What is IEX’s competitive advantage and outlook for market share post-market coupling in DAM and RTM?
A (Management):
• Leadership due to robust technology, customer engagement, regulatory relationships, and data analytics.
• Confident of retaining a large market share even after coupling; will continue customer-centric initiatives.
• Market coupling only impacts DAM (~35–40% of volumes); other segments remain unaffected.

Q 2 (Composite): Will competitors use transaction fee cuts or other levers to gain share post-coupling?
A (Management):
• Transaction fee is a small part of total procurement cost; will respond if needed.
• Other value-added services and technology remain differentiators.

Q 3 (Composite): What is the status and timeline for market coupling and its operational details?
A (Management):
• Many operational/procedural aspects yet to be finalized (common software, clearing/settlement, regulations).
• January 2026 timeline may be optimistic; RTM coupling to be considered later.
• State commissions have no role; all approvals with CERC.

Q 4 (Composite): What is the impact of regulatory changes (MBED, SCED, VPPAs, DSM, derivatives) on IEX?
A (Management):
• MBED not mentioned in current order; SCED is a subset of MBED.
• New regulations (VPPAs, DSM, derivatives) expected to increase exchange volumes and market depth.

Q 5 (Composite): What explains the sharp increase in other income and gas volumes?
A (Management):
• Other income up due to mark-to-market gains on target maturity funds and NIFTY 50 index fund investments.
• 75% of other income from own funds, 25% from float.
• Gas volume growth led by demand from OMCs, refineries, CGDs, and long-duration contracts.

Q 6 (Composite): What is the status of new initiatives (Coal Exchange, EPR trading, ICX)?
A (Management):
• Coal Exchange: Awaiting legislative changes (MMDR Act amendment).
• EPR trading: Awaiting CPCB decision.
• ICX: 44 lakh I-RECs issued in Q1 FY26; revenue at INR 178.8 lakhs.

Q 7 (Composite): What are the legal/strategic options post-CERC order on market coupling?
A (Management):
• Evaluating the order; options include review by CERC, appeal to APTEL, or proceeding as directed.

Q 8 (Composite): Will product development and new segment initiatives continue despite regulatory uncertainty?
A (Management):
• Product development is a continuous process; petitions for new products already filed and will continue as needed.

3 · Other Key Numbers

• India's peak summer power demand in June 2025: 242 GW (met without shortages).
• Power consumption Q1 FY26: 446 billion units (down 1.3% YoY).
• Coal production Q1 FY26: 247 million tonnes; coal inventory mid-July 2025: 25 days.
• Imported coal price (4,200 GAR): ~$50/tonne (down 9% QoQ).
• Imported gas price: ~$11/MMBtu.
• BESS projects: 13,200 MWh (Tranche 1, awarded 9,750 MWh, 5,000 MWh pipeline); Tranche 2 approval for 30,000 MWh.
• BESS tender prices (June 2025): INR 2.16 lakh/MW/month (NVVN), INR 2.08 lakh/MW/month (NHPC).
• Supply liquidity in DAM up 45.2% YoY.
• Average DAM price: INR 4.41/unit (down 16% YoY); RTM price: INR 3.91/unit (down 20% YoY).
• RTM price on May 25: INR 1.53/unit (near zero in several time blocks).
• IGX Q1 FY26: 24.6 million MMBtu traded; PAT INR 14.1 crores.
• ICX Q1 FY26 revenue: INR 178.8 lakhs; I-RECs issued: 44 lakh.
• PTC India contributes 10–12% of IEX volumes; cannot trade on competing exchange due to equity holding.
• Other income Q1 FY26: INR 42 crores (up 37% YoY).
• No revenue share with NSE/BSE for power derivatives; agreement with MCX to use IEX price.
• No specific capex, client wins/losses, or margin guidance disclosed.

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.