Indian Energy Exchange Ltd Research ReportIDirect Instinct

IEX, the premier electricity exchange of India is a proxy play for India’s short term power market which is still at a nascent stage (10% of total market), albeit with an enormous potential. New product launches such as RTM (Real Time Markets) will enable discoms to manage their power demand-supply variation more effectively while also providing generators to sell their unrequisitioned capacity. Going ahead, we expect share of IEX in the short term market to increase further with a decline in bilateral transactions. We believe, IEX’s virtual monopoly in the segment, India’s overcapacity in power and lower short term market rates are some of the key catalyst that would usher higher volumes on the exchange. Furthermore, the Indian Gas Exchange which is currently a seed in the pot also provides an embedded option value.