“If the present valuation stays intact, the stock performance may track earnings growth. We believe there is a tactical opportunity to make returns in IEX by riding the power demand growth and improved liquidity on exchanges,” said a report by Axis Capital.
The first 45 days of FY25 have kicked off with 12% all-India electricity volume growth. IEX expects its traded electricity volumes to surpass 20% if the FY25 power demand growth is at 7-8%, which will be aided by strong growth in LDC (10 BU in FY24; guided up to 50% YoY), Green (3.2 BU in FY24; guided up to 50% YoY), the report added.
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IGX is expected to benefit from a reduction in gas prices and volumes are expected to grow 20% in FY25 after a 20% dip in FY24. Accordingly, Axis has raised gross FY25/26E volumes by 5/6.9%, implying 19.2/15.1% growth, which translates to 18.3/13.4% EPS growth in FY25/26E. “The share of ST market in all-India power transacted has increased to 15% (+132 bps YoY) and the share of exchanges in Indian power transacted has increased to 8% (+75 bps YoY) – this trend is expected to continue, with the ST market share expected to increase to 25% in five years, with incremental growth of ST driven with 70% share for exchanges,” says Sumit Kishore, analyst at Axis Capital.IEX had reported a 14.7% YoY increase in its Q4 PAT on May 15 along with a revenue at Rs 149.5 crore for the same period, while also announcing a final dividend of Rs 1.50 per share.The shares of IEX rallied nearly 5% today on BSE to day’s high of Rs 166.25.
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