On Thursday, July 24, IEX shares plunged nearly 30% to a 52-week low after the Central Electricity Regulatory Commission (CERC) approved market coupling, a regulatory change that has long been viewed as a structural threat to the company’s dominance in power trading.
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 previous trading sessions in July. Over 43.75% of the shares traded on the NSE were marked for delivery, indicating heavy investor churn.
Interestingly, activity had intensified in the days leading up to the announcement. Volumes over the three sessions prior to Thursday stood at 78 lakh, 97 lakh and 92 lakh, compared to a 10-day average of 61 lakh.
Q1 results offer relief
The rebound on Friday followed the company’s Q1FY26 results, released after market hours on Thursday. IEX reported a 25% year-on-year (YoY) increase in consolidated net profit to Rs 120 crore, compared to Rs 96 crore a year earlier. Revenue for the quarter climbed 19% YoY to Rs 184.2 crore, driven by robust trading volumes.
Electricity volumes on the exchange rose 14.9% YoY to 32.4 billion units in Q1FY26. 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.
Market dominance under scrutiny
IEX commands over 90% market share in the Day-Ahead Market (DAM) and Real-Time Market (RTM), both of which are key revenue drivers. However, centralized price discovery under market coupling could erode this advantage.
“Market coupling has been a persistent overhang for IEX, and with CERC’s recent approval for its implementation, we expect a sharp decline in the company’s market share, resulting in a loss of its dominant position in the DAM and RTM segments,” said Rupesh Sankhe, vice president and power sector analyst at Elara Securities
To retain volume amid rising competition, IEX may be compelled to lower trading margin, further weighing on earnings, said Sankhe.
“While regulators aim to improve efficiency and transparency, investors fear revenue erosion and reduced platform stickiness. 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.
F&O ban limits trading
The stock was placed under the F&O ban on Thursday after open interest in its derivatives contracts breached 95% of the Market-Wide Position Limit (MWPL) on the NSE. Under this framework, no new positions can be created in F&O contracts, though existing ones can be squared off. The mechanism is designed to curb speculative build-up and prevent market disorder.
Violations of the F&O ban can attract penalties under Sebi norms, ranging from 1% of the position value (minimum Rs 5,000) up to Rs 1 lakh, along with potential trading suspensions.
Also read | IEX shares rebound 8% after worst fall, driven by upbeat Q1 earnings
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