Fundamental Wringer of IEX: The increase in the nation’s GDP, an increase in the income among consumers and a transpiration in our daily lifestyle have led to an increase in the consumption of electricity in India.

This demand is expected to remoter increase in the future. While various companies produce power in India, there is only one of them that has a majority share in the physical wordage of electricity wideness the nation. This visitor is IEX Limited.

While the company’s stock has given good returns in the past, it has witnessed a significant fall in the recent year. In this article, we will self-mastery a fundamental wringer of IEX industries and try to find the reason overdue its recent ripen and moreover see if the stock has future potential to increase in the future.

Fundamental Wringer Of Indian Energy Exchange

Company Overview

The Indian Energy Mart (IEX) is a leading marketplace for energy in India. It provides a nationwide streamlined trading platform that enables the physical wordage of electricity, renewables and electricity.

The visitor has recently pioneered cross-border electricity trade which has with an aim to create an integrated South Asian Power Market.

IEX employs cutting-edge technology that is both user-friendly and customer-focused. It promotes efficient price discovery and facilitates the purchase and sale of power.

IEX has a large network of approximately 7,300 participants from 29 Indian states and 5 union territories. Distribution utilities, conventional and renewable energy providers, and obliged entities are among the participants.

Furthermore, there are over 4,600 commercial and industrial consumers from industries such as metal, supplies processing, textile, cement, automobile, IT, and others.

Products of the company

The pursuit are the products offered by the company:

Electricity Market

• Day Superiority Market
• Term Superiority Market (contracts of upto 3 months)
• Real-Time Market
• Cross-Border Electricity Trade

Green Market

• Green Term Superiority Market
• Green Day-Ahead Market

Certificate Market

• Renewable Energy Certificates
• Energy Saving Certificates

The pursuit images will remoter help you understand the company’s products and product mix.

Industry Overview

India is the world’s third-largest producer and consumer of electricity, with 411.64 GW of installed topics as of January 31, 2023. The sector contributes significantly to the government’s income, with the government collecting over Rs 1.5 trillion in taxes and duties.

The electricity industry is a crucial component of the Indian economy and plays an important role in the growth of the country.

This increased demand for electricity will goody power trading businesses like IEX tremendously considering they ensure that electricity is wieldy when and where it is needed and can squire to stabilise the grid.

Though IEX Limited has a dominant share in the power trading industry, the recent news well-nigh the government considering implementing market coupling poses a serious threat to the visitor losing its market share.

Market coupling is the process of establishing a unified price for electricity wideness all exchanges. This threatens IEX’s market share considering participants will no longer need to trade on a unrepealable mart to get the weightier price.

Indian Energy Mart – Financials

We will now perform a fundamental wringer of IEX mart using the company’s yearly reports.

Revenue and Net Profit Growth

The profit and loss worth of the visitor indicates that the revenues of the visitor have increased unceasingly over the last 5 years. The revenue has grown from Rs 294.15 Crores in FY19 to Rs 474.10 Crores in FY23 which gives a CAGR of 12.67% during this duration

The table unelevated shows the total revenues of IEX Limited for 5 financial years:

Similar to the revenues, the visitor has moreover reported a resulting increase in its net profits over the last 5 financial years. The net profit has grown from Rs 165.03 Crores in FY19 to Rs 305.99 Crores in FY23 which gives a CAGR of 16.69% during this duration.

The table unelevated shows the net profit of IEX Limited for 5 financial years:

Margin Analysis

As the visitor mainly deals with the distribution of energy and not its production, it does not deal with many operating expenses.

If the take a squint at the EBITDA margins of the company, we can see that visitor has retained the majority of its revenues surpassing written for interest, depreciation and tax expenses.

Apart from having these margins whilom 80%, you can moreover notice that these margins have unceasingly increased year-on-year.

The table unelevated shows the EBITDA margins of IEX Limited for 5 financial years:

Even without written for the spare expenses, the visitor has managed to retain increasingly than 55% of the revenue and moreover managed to unceasingly increase its net profit margins year-on-year.

The table unelevated shows the net profit margins of IEX Limited for 5 financial years:

Return Ratios: RoCE and RoE

The return on probity of IEX Limited has been whilom 38% over the last five financial years which suggests that the visitor has generated good returns on shareholders’ capital.

The table unelevated shows the ROE of IEX Limited for 5 financial years:

Similarly, the visitor has reported a RoCE of increasingly than 45% over the last years which indicates an efficient utilization of resources by the company.

The table unelevated shows the ROCE of IEX Limited for 5 financial years:

Debt-to-equity ratio

The debt-to-equity ratio of the visitor is reported as Nil which indicates that the visitor has zero or negligible debt and is running its merchantry using its own resources.

Zero debt moreover suggests that the visitor does not have any obligations towards repayment of interest or the principal value which is why it is worldly-wise to retain its majority of revenue.

Future Plans Of Indian Energy Exchange

So far we looked at the previous fiscals’ data for our fundamental wringer of Indian energy mart Limited. This section will struggle to make sense of what lies superiority for the visitor and its shareholders.

1. The visitor has expanded its workshop into the synchronous market
2. The visitor has introduced derivatives that will indulge for price hedging and lower volatility in prices, hence enhancing liquidity in the spot market.
3. The visitor launched IGX in 2020 which achieved a breakeven in its first year of operation. It is expected to have robust revenue growth over the next 5 years
4. ICX a wholly-owned subsidiary of IEX has plans of expanding its merchantry in the voluntary stat credit market.

Fundamental Wringer of IEX – Key Metrics

We are scrutinizingly at the end of our fundamental wringer of Indian Energy Mart Limited. Let’s take a quick squint at the stock’s important metrics.

In Closing

As we conclude our fundamental wringer of IEX Limited, we can say that as long as the visitor does not lose a major market share due to market coupling and regularly increases its earnings, it can grow its merchantry in the future.

Written By Aaron Vas

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