IEX’ 9M electricity volume grew 20% as demand by discoms continues to be strong (led by electrification, elections etc.); transaction revenue (90% of top line) grew 17% YoY.
Power exchange in India to benefit from: (1) nascent stage (4% of generation); (2) favourable policy measures by regulator (linking DSM prices to power exchange; (3) discoms sourcing peak-load from spot (vs. PPA) to savecapacity charges; (4) robust renewable growth (infirm, concentrated) to boost liquidity on exchanges – we believe these factors would drive 18% sustainable volume CAGR of IEX in the long run.
Further, ongoing working papers on cross-border trade through exchange, reduction in gate closure, online open-access clearance to increase liquidity on exchange multifold; IEX remains our preferred pick, maintain ‘buy’.
