IPO Note- Indian Energy Exchange
“Indian Energy Exchange (IEX) is the dominant exchange in India for trading electricity in the country. It has a market share of over ~98% of the volumes in the power exchange industry.
Outlook & Valuation: IEX is likely to continue its current growth trajectory as the short-term electricity market would continue its migration away from other platforms and to the exchanges. The company is also likely to sustain its position as the dominant market player. The company is also likely to benefit from long-term industry trends as the Indian power market moves towards global standards. The company has an ROE of 30.8% Vs 7.4% for Multi-commodity Exchange (MCX), based on FY18 annualized earnings. At the upper end of the price band, the pre issue P/E multiples works out be 40.9x of FY2018 annualized EPS or IEX,Vs 51.5x of FY2018 annualized EPS for MCX. We recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term period.”