EUR 120.00 For Business Accounts Only

MOSL: IEX (Neutral)-Strong electricity volumes drive profit

IEX: Strong electricity volumes drive profit

(IEX IN, Mkt Cap USD1.8b, CMP INR443, TP INR410, 7% Downside, Neutral)

 

• IEX’s result highlights the benefit of strong growth in electricity volumes, leading to a 57% YoY rise in S/A EBITDA (in-line) for the quarter. S/A PAT jumped 48% YoY to INR636m.
• The launch of Real-Time Market (RTM) has shaped up well, with the product adding 4.6BUs in 1Q and accounting for 22% of total electricity volumes. With an oversupplied market, new product launches, and strong competitive positioning, we expect market share gains to continue for the company within the Short-Term (ST) Market. However, with the recent run-up in stock price, IEX now trades at 39x Sep’23 EPS and prices in this growth. We reiterate our Neutral rating, with revised TP of INR410/sh.

 Profitability rises on strong volumes

• IEX’s S/A EBITDA grew 57% YoY to INR766m (in-line) on robust electricity volumes.
• Electricity volumes – Day Ahead Market (DAM) + Term Ahead Market (TAM) + RTM – rose 43% YoY to 21.3BU. However, the lack of REC trading held back similar growth in revenues. S/A revenue was up 36% YoY to INR905m (in-line).
• S/A PAT was up 48%YoY to INR636m (in-line). Other income, though, was down 18% YoY to INR119m (est. INR145m).
• At the consol. level (incl. gas exchange), EBITDA was up 56% YoY and PAT 48% YoY to INR621m.