IEX: Subscribe for long-term gains

IEX already has a dominant position, with 99.4% market share of electricity contracts

Indian Energy Exchange (IEX), India’s largest power trading exchange, is coming out with an initial public offering (IPO) to provide exit to existing shareholders (entire IPO is an offer-for-sale). While IEX will not receive any of the funds raised, a consistent financial track-record and high return on equity (around 40 per cent) along with dominant market share is why the IPO stands out. IEX is also net cash-positive, with a balance of Rs 498 crore in FY17. Moreover, IEX’s prospects, which have been supported by government policies towards improving India’s power sector, remain robust as more impetus is expected.