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Indian Energy Exchange (IEX) is the premier electricity exchange in India, which facilitates electricity trade. The multibagger stock has surged more than 135% in the past six months whereas it has delivered returns of over 260% in 2021 (year-to-date) so far. From 220 apiece in January this year, the scrip has rallied to trading around 795 currently.

IEX commands a market share of around 95% in the power exchange market. The company has a debt free balance sheet with cash & investments to the tune of around 700 crore, said ICICI Securities in a note.

"For the past year, IEX has remained richly valued given its clean balance sheet, near monopoly, regulatory tailwinds and introduction of newer products, which will drive strong double-digit volume growth in medium term. We continue to remain positive and retain our Buy rating on the stock," said the brokerage. It has a target price of 910 per share.

ICICI Securities is bullish on the stock on increasing power demand and government policies. “With the Supreme Court disposing of a spat between Central Electricity Regulatory Commission (CERC) and Sebi, electricity can now be traded as other commodities with forward contracts and derivatives on exchanges," the note added.

It believes that settlement will open the gates for introduction of longer duration delivery bases contracts in power exchanges and IEX will be a beneficiary. This will not only add to volumes but also provide new products to the market.

“Shift of power buying pattern from power purchase agreements (PPAs) to short term market catalysed by MBED is expected to lead to a strong surge in volumes from FY24E. This can provide strong volume growth traction to power exchanges like IEX," the brokerage stated.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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