IEX shares slide 9% as market coupling fears continue to drag, brokerages cut targets
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Shares of Indian Energy Exchange (IEX) fell as much as 8.9% on Monday, July 28, to Rs 132.15 on BSE, as renewed selling pressure weighed on the stock amid persistent concerns over market coupling — a regulatory shift that threatens the company's dominance in power trading.The decline comes after IEX shares rebounded 13% on Friday, following the release of strong Q1 FY26 results. That rally offered temporary respite to investors after the stock's record single-day plunge of nearly 30% on Thursday, when the Central Electricity Regulatory Commission (CERC) approved market coupling – a move widely viewed as a structural threat to the company's business model.On Thursday, the sell-off triggered massive trading volumes, with 12.77 crore shares worth Rs 1,740 crore changing hands, surpassing the combined volumes of all 16 earlier trading sessions in July. Over 43.75% of the shares traded on the NSE were marked for delivery, indicating a sharp churn in investor positions.Brokerages have flagged the CERC's order as a significant threat to IEX's pricing power and market leadership.Nuvama said the regulation 'disrupts IEX's monopoly in the DAM market by introducing uniform price discovery across exchanges. This levels the playing field, impacting IEX's moat of price determination.'The brokerage expects IEX's share in the DAM and RTM segments (currently 99% of FY25 volumes and 80–85% of sales) to fall to 70% by FY27. 'A price war-led trading margin cut is likely, from 4p/kWh to 3.5p/kWh by FY28E,' Nuvama said, retaining a 'reduce' rating with a target price of Rs 133, down from Rs 173.Jefferies said that market coupling will accelerate IEX's market share losses, projecting a decline from over 80% in FY25 to 50% by FY28. 'The market coupling threat has become a reality… The regulation has taken away [IEX's liquidity advantage] as all power exchanges will have a uniform clearing price,' it said. Jefferies cut its price target to Rs 105 from Rs 150 and maintained an 'underperform' rating.Elara Capital also flagged 'significant pressure on IEX,' noting that CERC has approved phased implementation of market coupling, starting with the day-ahead market (DAM) by January 2026. 'This poses a major threat to Indian Energy Exchange's dominance, as market coupling could shift volume to rival exchanges,' it said, adding that IEX could be forced to lower trading margins to retain market share.IEX's Q1 FY26 performance briefly supported the stock last week. The company reported a 25% year-on-year (YoY) rise in consolidated net profit to Rs 120 crore, compared to Rs 96 crore a year earlier. Revenue climbed 19% YoY to Rs 184.2 crore, driven by robust trading activity. Electricity volumes rose 14.9% YoY to 32.4 billion units, while Renewable Energy Certificates (RECs) surged 149.3% YoY to 52.7 lakh units.'The company is currently undertaking a detailed impact assessment of the implications of [market coupling] and will keep stakeholders informed of any further developments,' IEX said in its post-results statement.However, analysts caution that earnings momentum could soften as regulatory reforms reshape market dynamics. 'With the core business model under pressure and limited clarity on long-term profitability, markets have rightly reacted. For IEX, the days of monopoly-like pricing power may now be history,' said Harshal Dasani, Business Head at INVasset PMS.
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