IEX falls 8% on CERC's market coupling draft; analysts flags revenue risk

Indian Energy Exchange (IEX) shares slipped 7.5 per cent in trade on BSE, logging an intra-day low at ₹125.45 per share. At 10:40 AM, IEX’s share price was trading 6.7 per cent lower at ₹126.55. In comparison, the BSE Sensex was up 0.45 per cent at 78,846.06. 

The stock came under pressure after the Central Electricity Regulatory Commission (CERC) proposed to streamline electricity price discovery across the country's power exchanges through a system called Market Coupling. 

“The commission has prepared the Draft Central Electricity Regulatory Commission (Power Market) (Second Amendment) Regulations, 2026,” the filing read.  

According to the draft notification, Grid India will act as the Market Coupling Operator (MCO) and will run the Market Coupling system. It will set up a separate cell specifically for this purpose. 

 

All power exchanges will collect bids from buyers and sellers in a uniform format and send them to Grid India. Grid India will then aggregate all bids and discover one market-clearing price — maximising economic surplus for both buyers and sellers. If transmission lines are congested, the market may be split into zones with different prices. Market Coupling will initially apply to the Day-Ahead Market (DAM) and Real-Time Market (RTM), with exact implementation dates to be notified separately. Different dates may be notified for different market segments.  READ | Jio Financial Services slips 3% on posting mixed Q4 nos; PAT falls 14%YoY 

The draft is open for comments/ suggestions/ objections on or before May 16, 2026. 

How will market coupling impact IEX?

Kranti Bathini, equity strategist, WealthMills Securities, believes CERC's draft market coupling regulation has resurfaced as a key overhang on IEX, weighing on the stock as it threatens to fundamentally alter the exchange's business model and revenue streams. 

"The recent regulations are going to impact the business and business model of IEX, which is going to impact revenues. The other exchanges pursuing similar business verticals in power trading are also going to have an impact on IEX's business. That is the reason the stock is in a downtrend," Bathini said.  READ | BHEL surges 35% in 8 days, hits 21-month high; brokerages remain upbeat 

He also added that IEX may lose its prominence in the market as the go-to platform for price discovery. 

Bathini recommended selling IEX shares on any rally.  Echoing similar views, Balaji Rao Mudili, research analyst, Bonanza noted that IEX holds roughly 84 per cent market share in the power exchange segment, so its discovered price was effectively the national benchmark which was also the major competitive advantage which it had.  "IEX effectively becomes a bid collection front end rather than a price discovering exchange thereby diluting its major moat. Following the new norms, smaller players like PXIL and HPX can attract volumes without having to build their own liquidity which for IEX means slower volume growth as it is no more the price decider," he said.  Mudili added: IEX makes about 78 per cent of its revenue from per unit transaction fees so any market share loss impacts the topline directly. There are two modes of trading on power exchanges i.e. the real time market (RTM) and the day ahead market (DAM). DAM will transition first under the new norms and it is IEX’s biggest revenue segment. IEX trades at a price-to-earnings (P/E) of around 24, a premium built on its dominance. If that dominance fades, multiples could compress. India's power market is expanding and even with a smaller slice of the pie, IEX could grow if the pie itself expands fast enough. But the monopoly like franchise narrative is effectively over and the market is still in the middle of repricing what IEX is worth without that moat.  Disclaimer: Views and outlook shared belong to the respective brokerages and analysts and are not endorsed by Business Standard. Readers are advised to exercise discretion.