Buy IEX For Target Price Of Rs. 285 For 1 Year: ICICI Direct

Indian markets tracking global cues and the gains in the US market overnight amid upbeat earnings news are trading firm with Nifty at 17,288.65 at around 10:27 am. Meanwhile post Q4 results, ICICI Direct has given its buy call on the stock of IEX.

Buy Indian Energy Exchange for Rs. 285 target price for 12 months.

ICICI Direct has given a 'Buy' on the monopoly stock of IEX. The stock in a year's time has yielded return to the tune of 69.5%, while in 3 years has produced 299% returns for its shareholders. The company is the premier electricity exchange in India, which facilitates trading of electricity. In the power trading segment, the company has a major share of appx. 95% and further has a debt-free balance sheet with cash & investments to the tune of around Rs. 700 crore.

Q4Fy22 results for IEX have been outstanding:

Revenue has been up 19.5% YoY at Rs. 112.1 crore. EBITDA also went higher during the period by 22.6% YoY at Rs. 94.9 crore and margins at 84.7%. Consequently, PAT for the quarter has increased to Rs. 88.6 crore, up 45.3% YoY.

Target Price and Valuation: The brokerage values IEX at Rs. 285 i.e. 55x P/E on FY24E EPS.

Investionale rationale for IEX:

-The company has taken to introduce longer duration delivery bases contracts in power exchanges.

- Bhutan commencing trading in DAM, commencing of trade in hydropower contracts in GTAM.

-Launch of National Open Access Registry and Long duration contracts (up
to 365 days) in the first half of CY23

Alternate Stock Idea:

NTPC is India's largest power generation company with a
total installed capacity of 66885 MW at the group level. NTPC has 17% of total installed capacity in India with 23% generation share. Brokerage ICICI Direct gives a 'Buy' on the stock for a target of Rs. 190 i.e. a probable upside of 19% considering last traded price of Rs. 160.05.

Disclaimer:

The above stock pick is taken from the report of ICICI Direct. Readers should not construe the story as an investment advice into the stock and should instead carry out their own due diligence before betting on any market linked security.