Indian Energy Exchange (IEX)

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1126

I’ve been observing the behavior of other power exchanges over the years — and frankly, I haven’t seen any meaningful innovation, new products, or strategic vision coming from them. I don’t know if I miss them.

Their support for market coupling seems more opportunistic than visionary — a shortcut to gain market share without building real value. It reminds me of legacy companies like Kodak or Nokia that failed to innovate and lost their relevance.

On the other hand, IEX continues to lead with innovation — be it the Indian Gas Exchange (IGX), Carbon Exchange, Real-Time Market, or Green Day Ahead Market. They’ve consistently stayed ahead of the curve, adapting to policy shifts and launching new platforms that align with India’s evolving energy needs.

End users are already accustomed to the IEX ecosystem. Shifting them between platforms every few months, as market coupling intends, isn’t just inefficient — it risks disrupting workflows and trust.

At the end of the day, innovation drives stickiness. And IEX, in my view, has built both a technological moat and a cultural reputation for reliability.

Let’s not confuse regulatory redistribution with customer loyalty.

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1127

Thank you for taking the time to write such a detailed and well-intentioned note :folded_hands:

You’re absolutely right — concentrated investing demands deep conviction and thoughtful risk management. I resonate with your point on incorporating technical signals like 200 DMA or trailing SLs. While my core approach is fundamentally driven, my next mission is to learn charting — not for timing every move, but to add another layer of discipline, especially as I start exploring momentum investing with ~10% of my portfolio.

Also, just to share — I don’t usually panic in sharp corrections. Instead, I prefer to accumulate during those phases, as long as my thesis holds. That’s been a key factor in scaling my PF by ~1300x — all while managing a full-time job abroad, CFA studies, and other responsibilities. I value peace of mind as much as CAGR.

Going forward, I plan to gradually expand my portfolio from the current 9 stocks to 15–16. But I don’t rush. It takes time for me to study, build conviction, and enter in phases.

So yes — I’m always open to feedback, and I deeply value these constructive exchanges. We all grow together — one insight at a time :folded_hands:

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1128

Can government or regulator do market coupling to NSE BSE? Isn’t this illegal to just remove a functionality of a business? Can IEX not go to court and appeal against this bullying?

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1129

https://www.moneycontrol.com/news/business/earnings/iex-q1-results-net-profit-jumps-21-to-rs-113-crore-revenue-rises-13-13321501.html

1130

Thank you for writing and explaining beautifully. Now i know about MCO in round robin manner. There is another minor thing which if we think in depth, market coupling is currently only going to be implemented in DAM segment, RTM and TAM segment’s price will be discovered on respective exchanges. So now according to my understanding, a business which is using IEX for trading power, won’t be only trading in DAM, he will be trading in other segments too. Now all segments being interconnected, what is the incentive for him to move from IEX to other exchanges only for DAM. He won’t be using two exchanges either. In my opinion volumes won’t be affected much unless market coupling is implemented accross all segments.Please share your views. TIA

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1131

Incentive to move to a rival exchange will be strong if the fees offered by the rival are significantly lower.

So far this was not even a thought because IEX is a monopoly.

This is how I am interpreting the developments post the CERC ruling, assuming I am understanding things correctly

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1132

Yes, thats the only incentive fees. I can’t think of any other incentive either.

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1133

Agreed - connecting only DAM will act as a resistance for organizations to move to another exchange. The promoters of the other two exchanges will use their relationships (e.g. PTC is very well connected in the ecosystem) to push their usage. My sense is market share loss for IEX will be gradual, though PTC MD yesterday said in an interview that within 18-24 months, he thinks HPX will be able to garner at least 33% DAM share. CERC seems to be very intent on making other exchanges viable keeping in mind the larger power reforms - with today’s market structure if they want to reduce the transaction charges for example, other two exchanges will find it very hard.

IEX still has the first mover advantage. Definitely margins will take a hit as other exchanges will offer to reduce transaction charges.

Key moniterable is IEX volumes - if exchange traded volumes continue to increase, even with market share loss and reduced profitability, they may continue to compound.

Disc - invested.

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1134

I would think of normal human behavior. If some other brokerage offers a lower brokerage , do we move out ? BSE charges are lower than that of NSE but NSE is still the dominant player. Lower charges have helped BSE grow up the value chain but NSE is still too far ahead and now no one thinks about the charges. The competetion is good for any market and that helps in market maturity. Over time , the cake will grow bigger and that may offset the projected loss of 5-6% revenue. Beside , every participant will now try to offer innovative products and that will create further markets.
Since the normal market appears to be in time correction mode , I assume 1:5 risk reward going forward.
Discl: Invested

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1135

As per this , Grid India recommended CERC not to go for coupling right now.
Grid India : Simulation has been done on post factor basis, not real time basis.
Looks like will not be implemented by jan and may take longer time.

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1136

@mannpatel, some one asked exactly the same question in the con call today. Management said it will involve overheads for the client, including maintaining margin money with both exchanges.

Another important point is IEX revenue from PTC (which is the promoter of HPX). Management clarified that while 10-12% revenue is from PTC, current regulations don’t allow PTC to trade on HPX until they reduce their holding to below 5% (current holding is 22%).

As per CERC order, RTM coupling will be decided based on experience of coupling DAM. As per the management, RTM is complex and therefore would be hard to implement coupling.

For DAM also there are a lot of steps to be completed before coupling can actually happen - amendments to regulation, finalizing the process changes for coupling of orders and settlement, commercial aspects, software development etc. They are doubtful if it can be implemented by Jan 2026.

We will have to continue to watch in the coming months how this will shape up. On the price front it was good to see some bounce back today.

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1137

Here the MD is saying they were taken completely caught offguard.

Rohit Bajaj, Managing Director of IEX, acknowledged that the market coupling announcement caught the company off guard. “Discussions were going on, and studies had shown that not much benefit was there from coupling,” he said. “On that basis, we were thinking it will not happen. But now it has happened.”

“Completely caught offguard” sounds like either the management was overestimating or underestimating instead of being realistic, to me. Both extremes aren’t very good.

If CERC as the regulator has full decision-making authority over power regulations, IEX has no choice but to comply.

So not sure what to make of the “caught offguard” comment.

It’s like a bank saying that they were caught offguard by an unfavorable RBI decision.

Managements will do their best to reassure and it’s not unreasonable for them to do so. One could even argue that it’s part of their duty.

But as minority retail shareholders, to what extent should we take comfort from this commentary alone is the question.

So best to do our own homework and remain sceptical about any overly optimistic management commentary as opposed to a honest & realistic assessment, is my learning from all this.

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1138

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1139

Can a exange grow faster than other b to c company? Overhang of market coupling lower down return on iex and this will remain for long time till rtm and other segments will not included in this. Can this very much regulated business make money for investor?

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1140

In face of looming regulatory uncertanities like market coupling, we should be updated with the growth levers and business diversification startegy of IEX to mitigate these risks and future business outlook:

IEX: Growth Levers – Deep Dive Analysis

Growth Lever Key Drivers & Actionable Points Impact / Investment Relevance
1. Rising Power Demand - India’s annual electricity demand expected to grow to 2,300 BU by FY30 from current 1824BU/year.- Peak demand expected at 366 GW by FY32 from Current 250 GW.- High GDP growth (6–7%) supported by electrification of transport, cooling (AC penetration 9x by 2050), data centers, EVs, etc. Directly translates to increased trading volumes for IEX. Historically, IEX volume growth has been 2.5x of power demand growth.
2. Regulatory Tailwinds - TAM contracts if allowed up to 11 months (from present 3 months)–>DEEP platform’s ~40 BU could shift to IEX.- LPSC Rules: Un-requisitioned power (URS) from generators (incl. state) must be offered on exchanges.- REC reform: Single REC market, fortnightly trade, elimination of floor price, MoP enforcement under Energy Conservation Act.- Green RTM launch pending final CERC approval.- Draft guidelines on Virtual PPAs to allow exchanges as platforms for VPPAs. Opens up additional volume avenues across multiple segments: URS, RECs, long-tenor TAM, and Green RTM.
3. Energy Transition - RE & Hydro capacity projected to form 60% of installed mix by 2030.- India has crossed RE penetration threshold (>20%) triggering new market structures.- CEA mandates 47GW/236GWh of BESS by FY32.- Battery storage and Firm Dispatchable Renewable Energy (FDRE) to increase sell-side liquidity.- RTC RE supply to help improve peak power availability. Evolution of new products like FDRE, BESS charging/discharging, RTC RE will push volume and deepen liquidity.
4. Market Deepening: MoP Roadmap - Introduction of Short-Term Capacity Contracts.- Market-based Ancillary Services, Demand Response, Time-of-Day pricing, and integrated capacity planning. Policy support for sophisticated market products gives long-term structural visibility to IEX’s platform depth.
5. Diversity in Demand-Supply - Regional diversity in power consumption and generation across seasons/hours (e.g., agricultural load in Telangana, solar peak hours).- Tariff reforms like Time-of-Day (ToD) to incentivize demand shift. Enables better load balancing and efficient price discovery, making IEX more relevant as platform for optimization.
6. Sell-side Liquidity Increase - Higher domestic coal production target: 1.3 BT by FY26, 1.5 BT by FY30.- 40–50 GW of RE to be added annually.- Fall in global gas and coal prices = improved PLFs.- New thermal projects: 36 GW in construction; 34 GW planned. Improved supply means better price stability, higher participation, and volumes across DAM/RTM segments.
7. Derivatives Market - Electricity Derivatives launched on MCX/NSE in July 2025 with IEX DAM price as underlying.- Will enable hedging and price certainty. Attracts institutional participants; expands market sophistication. Enables predictable cash flows for power users.
8. Capacity Market & Load Shifting - ToD tariffs and agricultural load shift push demand into solar hours.- Framework for Resource Adequacy finalized by CEA. Enhances solar hour liquidity and bids up participation in Green DAM, RTM.

Diversification Strategy – IEX Group

Business Segment Strategic Detail Relevance for Investment
IGX – Indian Gas Exchange - 60 Mn MMBTU volume in FY25 (+47% YoY).- Q1FY26: 24.6 Mn MMBTU (+108% YoY).- BOM contracts pending PNGRB approval.- Preparing for CBG Certificate Trading.- Hydrogen trading MoUs signed (EEX, GSPC, ACME).- Market share expected to grow from 2% to 4–5% by 2030. High-growth business; 36% expected CAGR in volumes. Cross-leverages energy transition and clean fuel shift.
ICX – Indian Carbon Exchange - Only Indian issuer of International RECs (I-RECs) – issued 44 lakh in Q1FY26.- Carbon credit trading aligned with global voluntary market.- Buyers mostly MNCs and European firms. Exposure to carbon markets aligns with India’s net-zero ambitions and gives IEX a global monetization angle.
Coal Exchange (planned) - Scheduled for launch by FY27 under Coal Controller Organisation.- Regulatory amendment (MMDRA Bill) pending.- Surplus coal to be traded via exchange.- 45 coal mines planned by 2030. If implemented, IEX will gain first-mover advantage in a multi-billion-tonne coal logistics and trading market.
Hydrogen Exchange (planned) - MoU signed for framework; early-stage.- India to become green hydrogen exporter in long term.- Linkage with CBG blending mandates and RE certificate trading. Strategic early move into future fuels market; long-term optionality.
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1142

Would greatly appreciate any feedback on what are the reasons that IEX has a 35% market share in DAC/TAM/GTAM (as per Q4 FY25 call) - and who has the remaining market share (unlike DAM/RTM where IEX is ~99% currently) ?
Trying to understand if there is any learning from these segments that can be used to understand the likely implications of the impact on market share due to market coupling in DAM. I am aware of the arguments on both sides (IEX as well as HPX) on what they think is their fair market share and why they will be able to retain or gain market share respectively

Disc. Not invested. Studying the position

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1143

Based on some additional research, it appears that price discovery in DAM and RTM is the major reason for the 99%+ market share. DAM and RTM are ~70% of volumes and likely even a greater share of revenues (see rationale for both arguments in Q3 FY25 call extract below). Management’s comments seem to imply that there is price (they use the word ‘incentives’?) and market share competition in TAM and REC markets (where they have 35% and 58% market shares respectively).

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I understand the DAM/RTM are double sided auctions - so market share is critical to price discovery. Once price discovery is transparent to all entities, it seems to become more like a TAM product (which is primarily a bilateral negotiation)? If this is the case, market coupling can have a big impact on market share. Any thoughts on whether the difference in price setting mechanisms between RTM/DAM and TAM have any difference in outcomes in market share when price differentiation does not exist?

Therefore, with market coupling and the removal of price discovery differentiation in DAM, there is clear threat to market share and/or revenue per unit. DAM seems to be declining in importance compared to RTM - it is down to 44% for FY25 from 64% in FY 22 and further down to 33% inf FY26 Q1 of total traded volumes. (I don’t know the logic for the same - would be good if anyone has any thoughts on this?). It appears overall DAM volume is flattening and therefore reducing as a share of total volume (at this stage there is no market share impact - so assume IEX = market). Therefore, as the IEX management is stating, the risk is for the moment limited to this part of revenues - and it appears the only issue is whether market coupling is impemented by Jan 2026 or implementation takes a little more time

As a bear case, if RTM also gets regulated to market coupling then most revenue will be under direct threat. Management’s defense of this is that the RTM product is more complex due to the requirement of auctions 2 per hour (48 per day) vs DAM being 1 per day. I do not have the expertise to know whether this is an insurmountable problem, but my guess is it does not look to be the case - but it would take more time. Would appreciate anyone with any further knowledge to comment on this. If the CERC decides to regulate RTM as well, perhaps the implementation time is longer (2-3 years?), but the implications for market share / revenue per unit remain the same post that

As a bull case, if RTM does not get regulated and remains the growing segment of the market then revenue growth will be driven by that. Not sure about the arguments regarding using a single platform / margin money in two locations are strong moats (else it would have applied to TAM market share loss as well?)

Would be great to have other views on the above

Also does not include assessment of IGX as has been highlighted by @Jubin_Jacob in his post above - which looks like a strong ecosystem with good growth.

Disc: Not invested. Studying as a potential position

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1144

IEX – Navigating Market Coupling & Defending a Moat

There’s been a lot of buzz around the CERC’s order
8-SM-2025.pdf (181.5 KB) on market coupling in the DAM segment, and rightly so. It marks a structural shift for India’s power exchanges and has serious implications for IEX, the current market leader.

To assess the impact, it helps to look at the before and after picture.

The key question now is:

When and why will volumes move away from IEX?

Some possibilities:

  1. If rival exchanges start offering better pricing consistently
  2. If one of them builds a far superior technology platform

But IEX has strengths it can lean on:

  1. A stable and reliable trading platform with fast settlements
  2. A loyal base of customers built over 17 years
  3. Tools, insights, and analytics that can help retain users
  4. The option to reduce or tweak fees if competition heats up
  5. Expansion into new areas like long-term contracts, green markets, and carbon credits

Yes, IEX will lose some share once market coupling is fully implemented.

But it WONT’T be a COLLAPSE.

From a near-monopoly position today at 95%, even if it falls to 70 or 75%, it will still be dominant.

The eventual share will depend on two things.

First, how smooth or chaotic the market coupling rollout is, especially in real-time markets that run 48 auctions a day.

Second, how well IEX continues to innovate on products and platform experience.

Also, DAM contributes only about one-third of IEX’s revenue. So the impact, while important, is not across the entire business.

The competition is also limited. Just PXIL and HPX. Both are about a tenth of IEX in terms of revenue. So IEX has the advantage of size, infrastructure and a head start.

The coming year or two will be important. If IEX adapts well and keeps adding value, its long-term investment case remains intact.

Suggest to also read the article written by Zen Nivesh on Substack

Disclaimer: Invested

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1146

ICICI Prudential MF Acquires 0.58% Stake in Indian Energy Exchange, Holding Exceeds 5% ICICI Prudential MF Acquires 0.58% Stake in Indian Energy Exchange, Holding Exceeds 5%

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1147

https://www.moneycontrol.com/news/business/markets/iex-to-meet-sbi-mutual-fund-on-july-31-2025-alpha-article-13338216.html

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