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Indian Energy Exchange IEX – Stock analysis

Indian Energy Exchange Limited

An Exchange or a Platform where Electricity is TRADED

It took some amount of googling to understand this better… Though I first heard about this, when I was an expat in Chile, one of the pioneers in Energy Sector reformation. Took a tour of their official site

Check this: https://www.iexindia.com/Default.aspx

Checked the stock price and other its technicals.. 

Share price: <180 https://www.moneycontrol.com/india/stockpricequote/diversified/indianenergyexchange/IEE

At the outset, my observations are, 

  • It has recovered quick from the Covid-19 low of March 25th and it has gained its pre Covid-19 valuation. 
  • P/E ratio looks over rated 31.33
  • EPS – 5.94

The P/E ratio, we can’t consider in its face value as high.. because we don’t have much competitors in this space and therefore comparison or to arrive at industry standard is tough. IEX is a market Leader

The below white papers helped me in understanding the operating & business model of this platform. 

References: 

https://eal.iitk.ac.in/assets/docs/Prasanna_Rao_Electricity%20Markets-IIT%20KANPUR.pdfhttps://www.sciencedirect.com/science/article/pii/S2211467X1830124X

Like any exchange they make profits from commissions of the transactions. Also from their admission fees, annual subscription fees etc., (running into lakhs)

Pros: 

  1. A growth sector – power, electricity – CONSUMPTION
  2. IEX has the early bird advantage
  3. Its the market leader
  4. The management looks professional – the CEO is a veteran in IT sector
  5. Consistent net profit track record
  6. No promoters – Professionally managed
  7. No Debt – No shares Pledged
  8. A glance at the technology (stack) used for their platform is refreshing – Latest tech
  9. Down the line, number of transactions will keep growing

Cons:

  1. The sector is still heavily controlled by the government – bureaucratic
  2. State government Electricity boards have monopolies and many are not ready for change
  3. Covid-19 will dent the consumption demand from the industrial space – short term

My Clarion Call:  Going to Buy this and watch closely in the short term. It will be a good long term buy – a multi-bagger..

#PeterLynch #ValueInvesting

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