Axis Capital upgrades IEX rating, raises target price to Rs 170
exchanges, Axis Capital raised the target price for IEX to Rs 170 with an ‘add’ rating for the stock from an earlier ‘sell’ recommendation.
“If the present valuation stays intact, the stock performance may track earnings growth. We believe there is a tactical opportunity to make returns in IEX by riding the power demand growth and improved liquidity on exchanges,” said a report by Axis Capital.
The first 45 days of FY25 have kicked off with 12% all-India electricity volume growth. IEX expects its traded electricity volumes to surpass 20% if the FY25 power demand growth is at 7-8%, which will be aided by strong growth in LDC (10 BU in FY24; guided up to 50% YoY), Green (3.2 BU in FY24; guided up to 50% YoY), the report added.
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IGX is expected to benefit from a reduction in gas prices and volumes are expected to grow 20% in FY25 after a 20% dip in FY24. Accordingly, Axis has raised gross FY25/26E volumes by 5/6.9%, implying 19.2/15.1% growth, which translates to 18.3/13.4% EPS growth in FY25/26E.
“The share of ST market in all-India power transacted has increased to 15% (+132 bps YoY) and the share of exchanges in Indian power transacted has increased to 8% (+75 bps YoY) – this trend is expected to continue, with the ST market share expected to increase to 25% in five years, with incremental growth of ST driven with 70% share for exchanges,” says Sumit Kishore, analyst at Axis Capital.
IEX had reported a 14.7% YoY
