IEX shares: JM Financial says market coupling remains uncertain, sets target at Rs 160

JM Financial maintained its 'Add' rating on Indian Energy Exchange Ltd (IEX), noting that the matter relating to the Central Electricity Regulatory Commission’s suo moto instructions on implementing power market coupling remained sub judice, with the next hearing at APTEL scheduled for January 9.

The brokerage said IEX had appealed against the CERC’s July 2025 order directing implementation of market coupling for the day-ahead market from January 2026. During the two hearings held so far, the appellant had argued that the order was not issued as a prelude to any regulation but was intended to affect the stock market. IEX had also contended that the methodology adopted to address the so-called monopoly was incorrect, adding that antitrust frameworks cited to justify coupling were applied in very different global contexts.

JM Financial noted that IEX has further argued that the CERC order itself quoted a study conducted by Grid India which concluded that market coupling would have a negligible impact on prices, even though price discovery was the stated objective of coupling.

The brokerage said that the development of additional power exchanges was important for the long-term success of new trading mechanisms such as derivatives, peer-to-peer power trading and virtual power purchase agreements, which were critical to the energy transition. However, it believed that power market coupling was unlikely to be implemented before December 2027, given the challenges involved in execution.

JM Financial estimated that IEX’s market share could taper to about 60 per cent by FY30E from around 75 per cent in FY28E, rather than falling to one-third as suggested by some theoretical scenarios. It also said new initiatives could increase the share of short-term power transactions to more than 10 per cent by FY30E from over 7 per cent at present.

Given the likelihood of near-term volatility, the brokerage maintained its 'Add' rating on IEX. It retained a target price of Rs 160, based on valuing the stock at 35 times FY30E earnings and discounting it back by three years.