Indian Energy Exchange (IEX) shares dropped about 4% on Friday, closing near their 52‑week low, after news that the regulator might lower the fees charged on power trades.
What triggered the sell‑off?
The Central Electricity Regulatory Commission (CERC) is reportedly considering a uniform fee of roughly 1.5 paise per kilowatt‑hour (kWh) on each side of a trade. Today, most exchanges charge 2 paise per kWh for both buying and selling, totalling around 4 paise per kWh.
Proposed fee changes
- Uniform fee of ~1.5 paise/kWh per side across most market segments.
- Potential reduction to 1.25 paise/kWh for term‑ahead market (TAM) contracts.
These numbers are based on media reports; the exact details are still unverified.
Why the fee cut matters for IEX
Transaction fees make up a sizable chunk of IEX’s revenue. A lower fee structure could compress margins, at least in the short run, even though trading volumes remain strong.
Analyst Harshal Dasani notes that the regulator’s move aims to improve transparency and lower costs for market participants. However, it also means the exchange may earn less per unit of electricity traded.
Potential impact on investors
- Margin pressure: Reduced fees could shave earnings, affecting the stock’s valuation.
- Volume resilience: If trading activity stays high, the impact may be softened.
- Regulatory risk: Ongoing oversight could bring further changes, adding uncertainty.
For now, the market is pricing in the risk of lower profitability, which explains the recent dip in IEX’s share price.
Current price snapshot
At 10:20 am IST, IEX was trading at ₹136.05 on the BSE, down about 2.2% from the previous close.
Disclaimer
Remember, this is just my perspective, not a prediction. Do your own research and consider consulting a certified financial adviser before making any investment decisions.