IEX share price crashes 15%, hits lower price band. What's behind the fall?

Mint

2 days ago

IEX share price: The stock of Indian Energy Exchange (IEX) tumbled as much as 23% on Thursday, July 24, after the country's power regulator, Central Electricity Regulatory Commission (CERC), announced that it would roll out market coupling from next year onwards. IEX stock also remains in focus ahead of the announcement of its Q1 results today.
IEX share price first hit the 10% lower price band of ₹ 169.10 on the BSE. But it soon extended losses and tanked 23% to ₹ 144.65.
CERC, in an order late last evening, said it would implement the coupling of the day-ahead market (DAM) of the power exchanges in a round-robin mode by January 2026.
Market coupling is an economic model used in energy markets to create a single, uniform price for electricity across different trading platforms or exchanges. The regulator's move is aimed at improving price discovery and system efficiency.
CERC further added that given the shorter time for bid submission and running the market clearing engine, the decision to implement the coupling of real-time market (RTM) of the power exchanges shall be considered at a later stage, after gaining operational experience from the coupling of DAM.
Stating its rationale behind the order, CERC said it would lead to uniform price discovery, better use of transmission lines and maximise overall benefit.
Following this announcement, the IEX share price tanked to its lower price band as investors are fearful that the said move will hurt its market dominance.
'The move is a regulatory game-changer—it transfers price discovery from individual exchanges to a central clearing mechanism managed by the Grid Controller of India. This undermines IEX's historical dominance in setting spot electricity prices,' said Harshal Dasani, Business Head, INVasset PMS.
Currently, IEX commands over 90% market share in DAM and RTM, both of which contribute significantly to its revenue. In FY24, DAM volumes alone were over 73 billion units, while RTM saw a 19% YoY growth.
'But with centralised price determination, the very role that made IEX indispensable—competitive price discovery—stands diluted. That means less trading advantage, lower transaction margins, and shrinking moats,' Dasani added.
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, he said.
Brokerage Bernstein cut its target price on IEX stock to ₹ 122 from ₹ 160, according to a media report. Analysts at the brokerage believe the impact will be felt on market share and, more importantly, on transaction charges, which would come down due to competitive intensity. With the moat of liquidity gone, now the only way for IEX to compete is through transaction charges, the brokerage believes.