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IEX stock in oversold zone, down 51% from 52-week high; time to buy?

IEX stock in oversold zone, down 51% from 52-week high; time to buy?

IEX share price today: The current market price amounts to a 51.3% discount to the 52-week high of Rs 304.05 hit on December 10, 2021

IEX shares are trading higher than 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages IEX shares are trading higher than 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages

Shares of Indian Energy Exchange (IEX) are trading at a 51% discount to their 52-week high. IEX stock stood at Rs 147.90, down 0.47% today against the previous close of Rs 148.60. The current market price amounts to a 51.3% discount to the 52-week high of Rs 304.05 hit on December 10, 2021. IEX shares are trading higher than 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages. It has lost 39.81% in a year and fallen 41.53% this year.

At 3:16 pm, the IEX stock was trading at Rs 147.80 on BSE. Total 3.27 lakh shares of the firm changed hands amounting to a turnover of Rs 4.82 crore on BSE. Market cap of the firm stood at Rs 13,282 crore.

Recently, IEX shares were in the limelight after board of the firm announced a buyback of shares at Rs 200 per equity share with an issue size worth Rs 98 crore. The share buyback price was announced in a board meeting held on November 25.  Last week, IEX stock rallied 9 per cent ahead of its scheduled board meeting for the buyback plan.

Brokerage ICICI Securities said the share buyback was a positive development with the buyback being one of the methods to use surplus cash on company's books amid limited capex spends.

Also Read: IEX shares jump 3% ahead of share buyback decision; PL sees stock at Rs 175 in short-term

IEX had surplus cash in excess of Rs 868 crore as of H1FY23 end and as per buy-back regulation, the maximum buy-back quantum is around Rs 98 crore (i.e. up to 25 per cent of total shareholders networth). With a buyback price of Rs 200/share this corresponds to 14.95 per cent of equity capital of the company. This move is positive for shareholders, the brokerage said.

However, the stock has remained flat since the buyback was announced. The share was trading at Rs 147.80 today against the close of Rs 147.05 on November 24.

In the second quarter of the current fiscal, IEX reported nearly 7 per cent fall in its consolidated net profit at Rs 71.20 crore against a net profit of Rs 77.38 crore for the quarter ended September 30, 2021. Total income declined to Rs 113.77 crore in the quarter from Rs 122.30 crore in the same period a year ago.

Here’s a look at what analysts said about the prospects of the stock and is it a good buy in the current market position.

Manoj Dalmia, founder and director, Proficient Equities said, "The stock is fundamentally strong and can be accumulated at current levels and can reach Rs 166 in the short term. Further buying can be done above Rs 180 levels."

Also Read: IEX stock rises 5% on share buyback plan

Ravi Singh, Vice President and head of research, Share India said, "IEX which is a technology led energy market place erased 50 percent of its gains of 52 week due to a decline in topline and bottom-line for the September quarter. Operating profit or EBITDA declined 17 percent due to weak volumes during the quarter while margin also contracted. The downside pressure may remain in the stock for sometime and may push the counter to the levels of Rs 135 in the coming trading sessions."

Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking said, "Consecutive lower low formation in both weekly and daily time frames indicates that the trend in the stock has been methodically negative. However, amid such negativity, prices are at extreme oversold conditions in the weekly time frame. Hence, a relief rally or a consolidation in prices can be seen before swaggering back to its negative momentum. The entire down move since December 21 is well channeled with immediate resistance seen around  Rs 175-177, from the upper panel of the pattern which further coincides with the immediate swing high of August 22 followed by a 50% retracement of the entire up move since September 19. However, prices are now crawling above the 61.8% retracement. Hence, sustaining above the latest support base of  Rs 137-140 can lead to a pullback rally towards  Rs 177, though sustainability remains doubtful until and unless it trades decisively above 180 levels which can change the polarity back to positive."

 Abhijeet from Tips2Trade said, "After stellar returns in 2020-21 which saw an excellent bull market especially for mid and small cap stocks, 2022 thus far has been a year of correction for some of these past outperformers like IEX. Technically, IEX needs to close above 153 on the daily charts for investors to buy for targets of  Rs 164- Rs 168 in the near term.  Rs 141 will now remain a strong support."

Om Mehra, Technical Associate, Choice Broking said, "Indian markets are trading near all-time-high levels, but Indian Energy Exchange (IEX) is trading near 52-week low. Reason behind this fall was due to a new competitive business. However, IEX still looks to be growing as the overall sector will grow in future. Technically, IEX has shown a decent correction after breaking  Rs 145 levels which was a good support on charts. Now, IEX is inching higher forming Higher High-higher low. As the immediate resistance is placed at  Rs 155 levels, once the price holds and sustains, it may strengthen in the coming weeks to move higher. RSI and MACD remain in the neutral zone. Indian Energy Exchange is trading higher than 20 and 50 DMA but lower than 200 day moving averages. The stock's technical setup is showing an increase in volume. As the business model still enjoys monopoly; investors may opt to buy on fall as IEX may deliberately move 12-15 percent higher from current levels, prior to 2023-24 Budget."

Indian Energy Exchange is engaged in providing an automated trading platform for the physical delivery of electricity, renewables, and certificates. It offers various trade markets, such as the electricity market, green market and certificates. The electricity market includes day-ahead market, term ahead market, real-time market and cross border electricity trade. The green market includes green term ahead market and green day-ahead market. 

Published on: Nov 30, 2022, 3:42 PM IST
Posted by: Priya Raghuvanshi, Nov 30, 2022, 3:39 PM IST