Midcap Stock IEX Gives 15% Return In One Month Amid Volatile Market; Should You Buy?

IEX share price ended higher on Tuesday, extending its rally for the third consecutive session amod strong buying momentum. IEX shares closed 0.26% higher at Rs 209.95 apiece on the BSE.

The equity shares of Indian Energy Exchange (IEX) gained more than 5% in three sessions. The rally was fuelled by strong business growth and bullish view by brokerage firms in the stock.

IEX reported strong growth in electricity trade volumes during the month of May. The company's electricity traded volume grew 14% YoY to reaching 10,946 million units (MU) compared to 9,568 MU in the same month last year.

Notably, the Real-Time Electricity Market (RTM) achieved its highest-ever monthly traded volume in May 2025, surging 42% to 4,770 MU from 3,352 MU in May of the previous year.

Rally in IEX shares also came after JM Financial initiated coverage on the stock with a bullish view.

According to JM Financial, IEX dominates this space with an 84% market share and over 7,900 participants. It has consistently led the market through innovation and technology, trading over 100 billion units (BU) in FY24. May 2025 saw record monthly volumes, especially in the Real-Time Market.

Sector Outlook:

The short-term power market in India, comprising 7% of total generation, is growing rapidly at 18% CAGR, outpacing demand growth of 5-6%. This trend is expected to continue due to rising power demand (>6% CAGR from FY24-30), growing renewable energy (RE) share, and new instruments like virtual PPAs. States rich in RE are increasingly relying on short-term purchases due to supply variability, highlights the JM Financial report.

IEC Business Model:

The Indian Energy Exchange (IEX) is a leading platform where electricity is bought and sold. It provides an automated system for trading electricity and related products. This includes Day-Ahead-Market (DAM) and Term-Ahead-Market (TAM) electricity contracts, alongside Renewable Energy Certificates (REC) and Energy Saving Certificates. The company's platform helps electricity market participants trade and discover prices while managing risks.

IEX is the market leader with an 84% share and over 7,900 participants. Their success comes from offering new products and having a great technology platform.

IEX reported Renewable Energy Certificates (RECs) also rose sharply, by 65% year-on-year, reaching 17.43 lakh units. These certificates are crucial for meeting renewable energy obligations, and rising trade volumes reflect increasing participation and compliance from industry players.

IEX Report Card

Electricity derivatives are expected to work well with the spot market, which is where IEX is active. Over time, these derivatives should bring in more traders, making the market bigger, analysts said.

IEX is well-positioned to benefit from India's energy transition. With more renewables being added to the grid - expected to grow from 44% in FY24 to 60% by FY30 - power exchanges like IEX are likely to see steadily increasing trade volumes, according to Antique Stock Broking.

Electricity derivatives and new products like Green RTM, longer-term contracts, and even a future International Carbon Exchange could make IEX's platform even more versatile. The firm expects 17% annual growth in trading volume over FY26-27, leading to similar growth in profits, added the Stock Broking.

Should you buy IEX shares?

The brokerage firm, JM Financial, has initiated coverage on IEX shares with a 'Buy' rating and a target price of ₹231 per share, based on 35x P/E FY27.

IEX also has a strong financial profile of Rs 1,000 crore in cash reserves, a return on equity of 40%, and no debt, making it a low-risk, high-potential investment. Based on these strengths, Antique gives IEX a 'Buy' rating with a target price of Rs 254.

Technical Outlook

From a technical analysis perspective, IEX shares have broken out of a long-term pattern at ₹191 and are now aiming for the next resistance at ₹229, according to Sameet Chavan, Head Research - Technical & Derivatives, Angel One. He says the stock has built a solid base and continues to show strong momentum.

IEX shares have already gained 28% in the past three months, 16% year-to-date, and delivered 281% returns over five years, making it a multibagger for long-term investors.