Indian Energy Exchange IPO(IEX IPO): Brokerage Views & Run up to IPO

Indian Energy Exchange IPO (IEX IPO)
This post on Indian Energy Exchange IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on Indian Energy Exchange IPO and shall be updated continuously till the closure of the issue. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Indian Energy Exchange IPO or not.

Related Post: Indian Energy Exchange IPO (IEX IPO) Review
Indian Energy Exchange IPO: Grey Market Premium etc.

07/10/17 Grey Market Premium : Little activity  – NIL 

Subscription: IEX IPO  ( x times)
  QIB NII Retail Total
Day 3  2.56  0.85  2.61  2.28
Day 2   0.01 0.06  0.84 0.43
Day 1 0.01 0.01 0.30 0.15
Complete Anchor List

Anchor Investors (AIs) portion in the Public Issue of Indian Energy Exchange Limited, 1,819,501 equity shares have been subscribed today by 23 AIs at Rs. 1650/- per equity share. The Anchor Investors in the order of their investment include:

Smallcap World Fund, Inc, Eastspring Investments- India Equity Fund, Eastspring Investments Asian  Smaller Companies Fund, Nomura Fund -Ireland Public Limited Company – Nomura Funds Ireland-Indian Equity Fund, Sbi Magnum Mijlticap Fund, Birla Sun Life Trustee Company-A/C Birla Sun Life Balanced Advantage Fund, Birla Sun Life Trustee Company Private Limited A/C Birla Sun Life Dividend Yield Plus, The Master Trust Bank Of Japan Ltd As Trustee Of Blackrock India Equity Fund , ICICI Prudential Infrastructure Fund, Icici Prudential Value Fund  etc.

Click here for Complete IEX Anchor Investors List

Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on Indian Energy Exchange IPO .

Angel Broking: ” IEX is likely to continue its current growth trajectory as the short-term electricity market would continue its migration away from other platforms and to the exchanges. The company is also likely to sustain its position as the dominant market player. The company is also likely to benefit from long-term industry trends as the Indian power market moves towards global standards. The company has an ROE of 30.8% Vs 7.4% for Multicommodity Exchange (MCX), based on FY18 annualized earnings. At the upper end of the price band, the pre issue P/E multiples works out be 40.9x of FY2018 annualized EPS or IEX,Vs 51.5x of FY2018 annualized EPS for MCX. We recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term ” 

BP Wealth:
“The outlook of exchange business like IEX in India will continue to remain positive due to lower penetration level of people participating in financial markets. The company has reportedly given 14% CAGR growth in topline as well as bottomline since FY13. The company has also seen a rise in its traded volumes at a rate of 15% CAGR in electricity and 23% in terms of renewable energy. At 1,650 IEX is valued at 44.0x at its FY17 Earnings and the market cap being 5,004 crores which is in line with other exchanges. On account of its strong fundamentals and consistent growth pattern along with its dominant market share, we give a rating of “SUBSCRIBE” with a long term perspective.”

Capital Market: ” Score 46/100, For the June 2017 quarter, net sales stood at Rs 55.47 crore with OPM of 76% resulting in an OP of Rs 42.16 crore. Other income stood at Rs 6.19 crore. Interest cost was Nil and depreciation stood at Rs 1.48 crore. After providing for total tax of Rs 16.22 crore, PAT for the June 2017 quarter stood at Rs 30.64 crore. Due to seasonality of business, the June 2017 quarter results cannot be annualised. “

Choice Broking: “Considering its robust fundamental, dominant market position, consistent financial performance and dividend payout, we are having a positive outlook for the company. However given the demanded stretched valuation, we assign a “Subscribe with Caution” rating for the issue.

ICICI Direct: “On the valuation front, based on FY17 numbers Indian Energy Exchange is available at a P/E of 44.1x valued at the upper price band. Since there is
no listed peer, exchange, for a like-to-like comparison of the company, we have taken domestic as well as global exchanges for providing a background. On the back of an attractive cash yield of 4%, cash rich balance sheet, high profit margins, negative working capital cycle and superior return profile, we advise investors to SUBSCRIBE to IEX.”

Nirmal  Bang: “Revenues, EBITDA and PAT of IEE have grown by 14%, 12.8% and 14.4% CAGR respectively from FY2013 to FY2017 mainly driven by volume. As per CRISIL the volume growth of power trading on exchange which has grown by 14.8% CAGR from 2013 to 2017 is further expected to grow by 25% CAGR in next 5 year. IEE being dominant player in Power exchange with over 98% market share is likely to retain its dominant position. CRISIL expects IEE market share to remain high at 98% in 2022. IEE enjoy very high EBITDA margin of over 70% and reported ROE of 41.3% in FY2017. IEE generate high free cash flow and has Rs. 99 per share cash in book as on 30th June 2017. At Rs.1650, IEE is traded at 41x annualized Q1FY18 EPS of 41 and 27.9 EV / EBITDA x Q1FY18 EBITDA. We believe IEE has very attractive financial and likely to see consistent growth. We recommend subscribing to the issue.”

Prabhudas Lilladher: “We believe energy trading is at a nascent stage in India with only 3% market volume traded through exchange against ~30‐50% in developed countries. High return ratio, strong cash generation and strong industry dynamic make IEX an interesting investment candidate for medium/long‐term gains. We believe stock could deliver 12‐15% earnings CAGR. At the upper end of the issue price, the post money market cap works out to be ~Rs50bn and will trade at 44xFY17 earnings. We recommend “Subscribe” with a medium/long‐term perspective. “
Reliance Sec: “At a price band of Rs1,645-1,650, the Issue is valued at 43.5x FY17 EPS. Its revenue, EBITDA and PAT has witnessed 18.7%, 17.3% and 12.3% CAGR, respectively through FY15-FY17. As IEX enjoys a dominant position in Indian short-term power market electronic platform, we believe that IEX would continue to deliver higher revenue and profit given the strong growth potential. Though the Issue is priced fairly, we recommend SUBSCRIBE to the Issue from long-term perspective on the back of strong fundamentals.”

Religare Sec: “IEX is well placed to benefit from conducive government policies and regulations that encourage the trading of energy and increase the volume of electricity products available to be traded over exchanges. It has posted Revenue and PAT CAGR of 13.9% and 14.4% respectively over FY13-17. At the upper end of the price band of Rs. 1,650, the stock is valued at ~40.6x of FY18E annualized earnings, which reflects the government’s focus on improving power infra, healthy balance sheet and strong operating margins.

SMC : “Rating 3/5. Indian Energy Exchange (IEX) is India’s premier power trading platform. Providing an automated platform for physical delivery of electricity, IEX enables efficient price discovery and offers participants the opportunity to trade in a variety of energy products. As nearly 90% of total revenue of the company depends on the volume of power traded on the exchange, the company’s trading volumes may get impacted by inadequate availability or congestion on interstate power transmission network due to lack of available transmission capacity. Along term investor may opt the issue.”

SP Tulsiyan website: “IEX Solid fundamentals with consistent growth in financial performance coupled with dominant market share make the issue an attractive investment opportunity. Issue is a ‘subscribe’, both from the listing gains and long term perspective.”

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