Amber Enterprises Investment Analysis by GNV Ravi Teja

Investment analysis by GNV Ravi Teja😎

Sharing my view about Indian Energy Exchange

1. It has 97.5% of the market share.

2. It is an Asset light business.

3. It has a Negligible Debt business with a good dividend-paying History.

4. It's a growth sector in the future - The power industry.

5. Generation, transmission, distribution are involved in the power sector.

6. IEX acts as a Trading platform between power companies and customers.

7. IEX makes revenue from Day-ahead Market( 96 % Market Share), Term ahead Market( 99 % Market Share), Realtime Market( 100 % Market Share), Green term-ahead market( 76 % Market Share), Renewable energy certificates( 100 % Market Share), Energy-saving certificates ( 100% Market Share).

8. Power market in Germany is 49%, the UK  is 47%, Nordpool is 91% but in  India, it is  5% market only.

9. In its total revenues Transaction fees contributes 80 % and admission annual fee along with certificate contributes 20 Percent revenue.

10. IGX is also a subsidiary of IEX. 

Points to be given importance.

1. Central regulator Energy Commission will decide the cost of the power sold not IEX.

2. As per rules 3 paise Per unit fee to be collected if the cost is less than 3 rupees cost if it's more than 3 rupees it's 7 paise can be charged.

3. So, completely revenue is based on volume generated.

4. Power trading market share increased from 0.4 % to 4.3 %.

5. PPA long-term agreements are decreased from 94 % to 89 %.

6. ROE is 45% and ROCE is 57% which is quite common for Asset light businesses.

7. Powerexindia is only the competitor but with a very small market share.

8. Topline and bottom-line revenues are good.

Decision Factors.

CON- Market coupling will affect the company's growth as it wants Power trading platforms to take only orders but can't execute. It can be executed by regulatory only. Order matching will be done outside the platform which will open doors for competition.

PRO- Market-based Economic Dispatch (MBED) wants long-term agreements to be executed through power trading platforms which is a big positive for IEX.

Sources- From Company website and couple of Youtube Channels