Indian Energy Exchange Target Price Raised to Rs 135: Prabhudas Lilladher

Indian Energy Exchange Sees Lower Than Expected PAT in Q4FY26

Indian Energy Exchange (IEX) has reported a Profit After Tax (PAT) of INR 1,240 million for the fourth quarter (Q4) of financial year 2026, marking an 11% year-over-year (YoY) growth. However, this figure falls short of the estimates provided by research firm Prabhudas Lilladher and the consensus estimates, by 8%.

The growth in total volumes for Q4FY26 can be attributed to an increase in volumes across all products except the TAM market. Furthermore, the FY26 volume stood at 160 billion units (BU), marking a 15% YoY growth. To mitigate the risks associated with market coupling, IEX is diversifying its portfolio by entering the proposed Indian Coal Exchange (ICX). This move is expected to reduce dependence on power volumes and minimize market coupling risks. The Indian Energy Exchange (IGX) and the proposed ICX will offer IEX diversification beyond electricity.

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The draft on market coupling has been released by the Central Electricity Regulatory Commission (CERC), although the actual timeline for implementation has been delayed. Despite this, market coupling remains on the cards.

Outlook and Recommendation

Given the expected moderation in volume growth to approximately 10% post-market coupling from a Compound Annual Growth Rate (CAGR) of ~20% over FY20-25, Prabhudas Lilladher believes that IEX will likely trade at a lower valuation multiple compared to historical levels. The research firm retains a 'HOLD' rating on IEX with a target price of Rs135, based on a price-to-earnings ratio (P/E) of 20x for the estimated earnings per share (EPS) in FY28.