IEX — earnings call

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Prepared remarks

–INDIAN ENERGY EXCHANGE LIMITED · MS. APARNA GARG – HEAD OF INVESTOR RELATIONS

MS. APARNA GARG – HEAD OF INVESTOR RELATIONS AND CORPORATE COMMUNICATIONS –INDIAN ENERGY EXCHANGE LIMITED MR. ADITYA WALI–INDIAN ENERGY EXCHANGE LIMITED

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to Indian Energy Exchange Q1 FY '26 Earnings Conference Call hosted by Axis Capital Limited.

As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone.

Please note that this conference is being recorded.

I now hand over the conference over to Mr. Rohan Gheewala.

Rohan Gheewala

Thank you, Pari.

Good afternoon, ladies and gentlemen.

On behalf of Axis Capital, I'm pleased

Moderator · Conference Operator

The next question is from the line of Subhadip Mitra from Nuvama.

Subhadip Mitra

Just one point of clarity.

I think this is a point that you've already talked about before.

So, when we are looking at market coupling in each of the exchanges getting the opportunity to be the market coupler for price determination on a round-robin basis.

So, on a particular day, if, let's say, exchange A is doing the price determination, it doesn't mean that the volumes have to also automatically flow through that exchange, right?

It can flow through any of the other exchanges depending on where the bids are coming.

Is that the right understanding?

SN Goel

Yes.

Volumes will be flowing through the exchanges from which the bid has come.

Subhadip Mitra

Secondly, a broader question on MBED versus SCED.

My understanding was that with SCED already in a pilot phase and some thoughts of extending these beyond Central government plans to even State-owned GENCOs, do you see MBED really having an impact since you already have an alternate mechanism to SCED?

Or do you think there is space for both?

SN Goel

Yes.

SCED is basically a subset of MBED.

If MBED is not being implemented, maybe to some extent, SCED is serving the purpose.

That is an optimization between the Central generating stations.

MBED was for Central generating stations, State generating stations, IPPs, everybody taken together.

Subhadip Mitra

Correct.

So, if SCED, I mean, hypothetically, if we assume that SCED gets extended to Central plus State generating stations and that is anyway running on the Grid India platform, then MBED, even if it comes, may not have much of an impact.

SN Goel

No. See, SCED is basically operated between the Central generating stations only.

In the same SCED, if you bring the State generating stations also and IPPs, then it will be as good as MBED.

Subhadip Mitra

Correct.

But then would exchanges still have a role to play there since that is already running on a pilot through a separate platform?

SN Goel

That is a different exercise.

That basically is just before the actual scheduling actual dispatch they are doing this optimization study.

But then bringing State generation to the Central SCED is a difficult process.

That is why an initiative is being taken to do intrastate SCED Within the State, (within) each of the State SCED is being done to achieve some efficiency there.

During your next visit, we can discuss in detail.

Moderator · Conference Operator

The next question is from the line of Abhishek Nigam from Motilal Oswal.

Abhishek Nigam

Sir, just a theoretical question.

I'm not asking you for your response to this.

But theoretically, what are the options available post the CERC order?

Can someone go to an appellate tribunal, Indian Energy Exchange Limited July 25, 2025 can you appeal in a court of law?

Again, just to reiterate, not asking you for your legal options right now.

SN Goel

There are many options available.

One is we go ahead with this.

Second is we go to CERC for review.

Third, is we go to APTEL.

So, there are many options available.

I told you at the beginning of this conference that we are evaluating this order and yet to take a view on this.

Abhishek Nigam

Fair enough.

I totally understand.

It's very, very early.

And the second question is that the order says that the exchanges have to basically cooperate with the market coupling operator.

Now it's still very early days, I know this is still being sort of worked out and you are going to look for clarification.

But is there any proprietary stuff, any software which they might expect or they might need to be able to implement this?

Do you think you have that clarity on that?

SN Goel

I'm not clear about your question.

Abhishek Nigam

So, my question is when the order says that the exchange has to cooperate with the market coupling operator, is it just data?

Or does it include some algorithm, something that is proprietary to you?

SN Goel

I don't find such mention in the order.

Can you tell me where it is.

Abhishek Nigam

Okay.

Maybe I'll just connect with Aparna later on.

SN Goel

Last Paragraph, Paragraph 9 is, “the commission hereby directs all power exchanges to share the necessary data and other information as required by the staff of the commission and Grid India to analyse various operational and procedural aspects for implementation of coupling in DAM.”

Abhishek Nigam

Yes.

Actually, that's what I was referring to.

SN Goel

No. This does not talk about technology or any such thing.

Abhishek Nigam

Yes, actually.

So that was my question.

So, it only talks about data investing, right?

SN Goel

That we are already providing.

Abhishek Nigam

Okay.

Perfect.

That clears it.

And just last question, post this disruption in one major segment, is there a sort of a rethink or a pause in terms of Strategy with respect to new product development, new segments which you are trying to enter and because something similar happens in one of those segments as well, then what are the thoughts over there?

SN Goel

Product development is a continuous process.

Five years back, we had only one product Day Ahead Market and Term Ahead Market.

Now today, we have so many products available.

So, in future also, this is a continuous process.

We have already filed petition for the Green RTM market and also a petition for peak power, 11 months contract is already with CERC.

So, it is a continuous process.

In due course of time, as and when we find that there is a need of a new product in the market, we will take that up.

Indian Energy Exchange Limited July 25, 2025

I think it is already about 3:30.

So can we have one last question or 2 last questions?

Moderator · Conference Operator

The next question is from the line of Nikhil Abhyankar from UTI Mutual Fund.

Nikhil Abhyankar

Sir, just one question from my side.

So, can you just share the revenue share agreement that we have with NSE and BSE for the power derivatives?

Moderator · Conference Operator

Thank you.

I now hand over the conference to management for closing remarks.

Rohit Bajaj

Thank you, friends.

I would like to thank each one of you for being part of today's call.

Throughout this quarter, we witnessed efforts from the government and regulators to establish a favourable policy and regulatory climate to develop the energy sector.

We at IEX remain committed to contribute to the development of sustainable and energy-efficient future for India.

Have a wonderful evening.

Thank you once again.

Moderator · Conference Operator

Thank you.

On behalf of Axis Capital Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

Questions and answers

13:21:55 +05'30' · Research Analyst

“Indian Energy Exchange Limited Q1 FY’26 Earning Conference Call” July 25, 2025

Moderator · Conference Operator

The first question is from the line of Bharani Vijay from Avendus Spark.

Bharani Vijay

Congratulations on a good set of numbers.

My first question is on market coupling.

Could you refresh us regarding the advantages that IEX has over its competitors, which helped it to have a near 100% market share in the DAM and RTM segments?

And also, why the competitors were not able to replicate this?

And if they would be able to gain market share now after market coupling implementation?

This is my first question.

SN Goel

Yes.

IEX has maintained a leadership position in the Day Ahead and RTM market over the years.

In the DAM market, in fact, from the last 17 years, we have the leadership position.

If you see initially, the other exchange also had some reasonable market share of 20%, 25%.

But over the years, they even lost that.

Indian Energy Exchange Limited July 25, 2025 And we today have more than 95% of market share.

And this has happened because of many factors.

There is not one reason, there are many factors.

One is we have a very, very robust technology platform.

We have introduced new products ahead of our competitors.

We have done a lot of activities with the customers.

We regularly interact with the customers, understand their problems, tell them how they can use the exchange to purchase cheaper power and optimize their power procurement cost.

We interact with the State regulatory commission.

In fact, we are in the advisory board of more than 12 State regulatory commissions.

We advise them how exchange and power market can be used for the benefit of distribution companies.

We provide a lot of data analytics to our customers.

And we have a web-based technology platform.

Our IT infrastructure is very robust.

In spite of so many cybersecurity attacks, so far on IEX platform, there has not been a single penetration.

And it's a sum together of all these activities because of which we have been able to have a significantly large market share in the exchange -- in the Day Ahead Market and the RTM market.

Going forward, even after coupling, I'm sure we will continue to do all these activities and maybe even more to ensure that the customers stick to us and the customer loyalty is maintained.

So, I'm very sure that we will be able to maintain definitely a larger market share even after coupling.

Bharani Vijay

Okay, sir.

My second question is on the trader members who trade on behalf of their clients and submit bids to IEX.

Like one significant trader member is PTC India.

So, I wanted to know what percentage of volumes overall for IEX and specifically in DAM market that PTC India as a trader member contribute because being investor in one of our competitors, post market coupling, I just wanted to see if they can shift this to that competitor.

So, I just wanted to know how much of it will be impacted.

SN Goel

As per the power market regulations, , if a trader member is holding more than 5% equity, then he cannot trade in that exchange.

Since PTC is holding 25% equity in the competing exchange and also on the Board of that exchange, they cannot trade on that exchange.

However, their percentage share is almost about 10-12% on IEX platform.

Moderator · Conference Operator

The next question is from the line of Sumit Kishore from Axis Capital.

Sumit Kishore

Thanks for the opportunity.

Your clarifications on the technology edge that IEX has and your other advantages versus competing exchanges are well received.

But do you see competition using transaction fee as a tool to take market share in Day Ahead Market post market coupling?

SN Goel

We will deal with that when we reach there.

Why to worry about that right now.

I don't think customers really will value that part of it because transaction fees is a very, very small component of the total power procurement cost.

But if that is the case, then we will deal with that also.

Sumit Kishore

Okay.

Because if they are not able to overcome your barrier of having a tech advantage and they cut price by 5% or 10%, you would have to follow suit in order to retain market share.

Is that the right understanding?

Indian Energy Exchange Limited July 25, 2025

SN Goel

I told you.

I mean we will deal with the situation when we reach there.

So if we have to do that, we will do that.

Sumit Kishore

Sir, would Day Ahead Market also include GDAM?

SN Goel

Well, today, it is DAM only, Day Ahead Market only.

Sumit Kishore

Okay.

So Green Day Ahead Market would not be part of the overall Day Ahead Market that would be impacted.

SN Goel

That is ambiguity in the order.

Sumit Kishore

Yes, it's not mentioned there.

SN Goel

Yes, it's not mentioned.

Sumit Kishore

And based on the current status of technological progress that Grid India might have made, do you foresee Jan '26 timeline as being implementable?

And where or when do you see RTM also forming part or progress on RTM to come under ambit of market coupling, if at all?

SN Goel

First of all, as far as the implementation of market coupling in the DAM segment is concerned, there are a lot of things to be done.

And one of the things is basically you need a common software for all 3 exchanges, the IT infrastructure for all 3 exchanges to be compatible.

You need clearing and settlement mechanism.

We have to work out that part of it.

And in fact, also at the commission’s end, they have to formulate regulations for the implementation of market coupling.

So all these things will need time.

So, let's see.

I will not like to comment on this whether January '26 is feasible or not.

But, based on the activities involved, I feel that it may take longer time.

That is about the Day Ahead Market.

As far as RTM market is concerned, I'm reading out from the order. “Given the shorter time for bid submission and running the market clearing engine, the decision to implement the coupling of RTM of power exchanges shall be considered at a later stage.” So, there is no decision.

The decision will be considered at a later stage after gaining operational experience from the coupling of DAM.

So, in this order, they have not taken any decision about the RTM.

Sumit Kishore

Sure.

And finally, any comment from your side?

Are we any closer to MBED now that market coupling has been put in place for Day Ahead Market?

SN Goel

Well, I think that is something which the regulator will have to decide about.

That is a much bigger issue.

So, let's hope that happens.

Moderator · Conference Operator

The next question is from the line of Vikas Jain from FQ.

Good Afternoon Sir.

Thank you for the opportunity.

So my question is regarding the recent order by CERC for the market coupling.

Is there any mention of MBED in the order that has been recently received?

Any comments or any insights on that part of the market coupling?

Indian Energy Exchange Limited July 25, 2025

SN Goel

There is no mention about MBED in the order.

So is it likely that, that would follow up from CERC or there is no hope that MBED will be implemented.

So, what is the management view from IEX on this one?

SN Goel

I can't say about that.

That is for the regulatory commission to take up that issue.

I wish that happened.

Moderator · Conference Operator

The next question is from the line of Kunal Tanvi from Banyan Tree Advisors.

Kunal Tanvi

My questions were related to market coupling.

I had a few questions around that.

One, if you can explain us how the regulation that has come up is going to play out.

Our understanding was that all the bids would be given to one exchange in a particular time and the prices would be discovered there.

So, the price discovery that used to happen on IEX will now happen across the 3 exchanges, right?

Because of that, is there any possibility of change in the pricing regulations by the regulator itself?

If you can throw some light.

SN Goel

All this will be a part of the various operational and procedural aspect, which needs to be decided by the Commission.

There are a lot of things like this, which needs to be decided.

Kunal Tanvi

Sure.

So at this point in time, the only clarity is that market coupling is being implemented and all for the DAM market.

That is the only clarity we have, right?

SN Goel

Yes.

You're right.

Kunal Tanvi

Sure.

The second question was when market coupling was first talked about like 4, 5 years back when the first draft had come, the idea was that market coupling would be a good tool for expanding the market and long term and PPAs would also come through.

Any thoughts that you would want to share like if in the form and shape that the current regulation talks about was to get implemented, what are the benefits to the customers' ecosystem that would come through?

SN Goel

What you're asking is basically MBED and as far as MBED is concerned, there is no mention of that bit in this order, and we are not sure when this will be taken up by the Commission.

Kunal Tanvi

And like if this form, the current form gets implemented, what are the benefits to the ecosystem?

SN Goel

Well, we don't see any benefit, but then it is a regulatory decision.

Kunal Tanvi

So, is there a possibility that because there could be a confusion among the ecosystem because of 3 exchanges?

SN Goel

Confusion in what respect?

Kunal Tanvi

For example, we have 95% market share, right?

So, if our customers were to trade on the exchange, they will continue to come on IEX and then the orders get pulled to some other exchange.

Your customers will continue to be yours?

Indian Energy Exchange Limited July 25, 2025

SN Goel

I wish that.

And I'm sure the kind of efforts we are making, we would like to maintain that.

We'd like to ensure that.

The customers remain with us.

Kunal Tanvi

Okay.

From a client perspective, you talked about there are numerous things that play a role in terms of value addition that you provide to the customer, including, technology and the support and the long-term relationship.

How do you think the price plays a role?

Like price discovery, how important is the role price discovery plays when customers come to buy a power on the exchange?

The reason I ask this question is if you see historically, the demand on the exchange, the volumes on the exchange have been a function of change in the price.

So, times when price is lower, you see higher volume.

So definitely, the price discount that the exchange plays some role in terms of more and more people coming on the exchange.

So, if you want to share some insights on that, it would be very helpful.

SN Goel

See, price discovery is the key function of exchange.

And one of the USP of IEX has been that in the last 17 years, there has been no questions raised on the price discovery of IEX.

We display all market data on our website.

We display the price discovery curves, and no issue has been raised by anybody till so far because that shows the robustness of technology platform and our price discovery process.

Let's see what happens after the coupling.

I would not like to comment anything on that at this stage.

Kunal Tanvi

Sure.

And one last question, apart from IEX since we have a very long history of operation, one competitor has a reasonable history of competition of operations.

The last one is very new.

Will the other exchanges be able to handle this kind of volumes if it could get divided among 3 exchanges?

Any comment you would like to?

SN Goel

I'm sure about one thing that before implementing the coupling, regulatory is definitely going to do the mock drill to check about the capability of the different exchanges, the IT infrastructure available and the capability of the exchange and then also do the mock trial with the big data post-trade basis.

And that it will be seen And what other efficiencies in the system and how to take care of that.

Moderator · Conference Operator

The next question is from the line of Prateek Jain from ICICI Prudential AMC Limited.

Prateek Jain

Yes.

So Sir, my question is regarding other income.

So, it was INR120 crores in FY '25.

And this quarter, it's INR42 crores, up 37% Y-on-Y.

So why is this large increase?

And can you broadly explain the source of this income?

What part of it comes from the interest on margin money and what part comes from the investments that belong to IEX?

HARLALKA · Research Analyst

The increase is mainly because of one target maturity fund investments we had in our books, whereby because of the rate cut by the RBI during the first week of June, we got a decent mark- to-market gain, so we capitalized on that gain.

We redeemed the funds and recognized that gain.

That was the one reason.

And second, we had some investment in the NIFTY 50 index fund.

So, a good amount of mark- to-market gain was during this quarter because of the market made a good recovery from 22,000 Indian Energy Exchange Limited July 25, 2025 to almost 25,000.

So these 2 factors were the main reason where we had a decent treasury performance during this quarter.

Prateek Jain

Okay.

And sir, regarding that, let's say, about FY '25, so if we have to look at the breakup regarding our own investments versus the interest income and from margin money, so what sort of proportion would that be?

HARLALKA · Research Analyst

It will be 2/3 will be from the own fund and around 2/3 to 3/4, about 75% will be from the own fund, around 25% from the float and other income.

Moderator · Conference Operator

The next question is from the line of Devesh Agarwal from IIFL Capital.

Devesh Agarwal

Good Afternoon Sir, and thank you for the opportunity.

Firstly, sir, to start with, I just wanted to know your thoughts.

Can this order be overturned by CERC?

Is there any recourse that we have?

SN Goel

If CERC decides to do that, they can do it definitely.

Devesh Agarwal

No, no. In terms of any legal opinions that you would have sought over the last 2 days, which gives some comfort that there is a case to challenge this?

SN Goel

We are evaluating this order.

We haven't made any view on this at the moment.

Devesh Agarwal

Right, sir.

So sir, in case assuming this goes through, one of the moats that we talked about was the technology.

So, when we talk about technology, is it the price discovery part is what we highlight?

Or is it the integration that we would have done over the years with the buyers and the sellers that is like a moat for us?

SN Goel

It is, I think, a combination of everything.

Devesh Agarwal

The reason I asked because you mentioned that there is a common software that will be developed to do this market coupling.

So, in terms of price discovery will be taken care by this common software?

SN Goel

Yes, yes.

You are right.

Devesh Agarwal

So then what we are left with is the integration part.

SN Goel

We have done so many things.

Out of that, one thing has been taken out.

So, rest of the USP still remains.

Rest of the activities, which we have done, they still remain with us, and I'm sure we will be able to get benefit of that.

Devesh Agarwal

And sir, is this something that will be very difficult for the competition to replicate in terms of - - or they can do that over time, say, probably 2, 3 quarters or 4 quarters, they'll be able to invest and replicate this or whatever technological advantage.

SN Goel

They had 17 years to replicate this.

Indian Energy Exchange Limited July 25, 2025

Devesh Agarwal

Although it's much difficult than that.

Right.

And sir, finally, one last one.

If we were to assume that with market coupling, if we have to sustain a market share of, say, more than 40%, 50% then what would be those key advantages that we would have to sustain that higher market share compared to the competition?

SN Goel

Devesh, we are working on all these strategies, and we'll let you know in due course of time.

I can assure you one thing that we are not working on retaining 40%, 50% market share.

We are working to retain the present market share.

Moderator · Conference Operator

The next question is from the line of Lokesh Manik from Vallum Capital.

Lokesh Manik

Sir, first question is in the order the savings mentioned is 52 million units.

Is it possible that the savings could have been derived by coupling only the number 2 and number 3 exchange because savings is nothing but inefficiency that is present in the system, which seem to have been efficient by combining all the three exchanges?

SN Goel

Increase of 52 million units is not a saving.

It is an overall volume cleared increase of 52 million units in a trade of 24 billion units 24,000 million units, there is an increase of 52 million units, which is insignificant.

I don't think those numbers can be a reason for doing the market coupling.

Lokesh Manik

Absolutely correct.

Sir, my second question is the order talks about amendments and operational procedures to be implemented.

In any scenario in any of these amendments, will there be a State involvement where involvement from states will be required from the 28 States?

SN Goel

Question is not clear.

Can you repeat, please?

Lokesh Manik

Will they have some form of approval from their end also will be required for these amendments to take place?

The order talks about some amendments in the Act.

SN Goel

All these approvals will have to be done by the Commission only.

There is going to be a new regulation for the market coupling.

Lokesh Manik

Right.

So will the State commissions be involved in this?

SN Goel

No, State commissions have no role to play in this.

Moderator · Conference Operator

The next question is from the line of Mohit Kumar from ICICI Securities.

Mohit Kumar

Good Afternoon Sir.

My first question, Sir, have you heard anything on the Coal Exchange(s) and EPR trading?

SN Goal

Coal exchange, we haven't heard anything about it, but I was reading in the newspaper that MMDR Act is going to the Parliament for some amendment.

And I don't know whether that Coal Controller of India will act as the coal regulator for the purpose of coal exchange, whether it is there in that (MMDR Act amendment) or not.

We have not been able to find out that.

But if that is there, then that is definitely one positive step in the right direction for Coal exchange.

Mohit Kumar

And anything on the EPR side, sir?

Indian Energy Exchange Limited July 25, 2025

SN Goel

Yes.

On EPR side, I think CPCB is yet to take a decision on that.

We are awaiting the response.

Mohit Kumar

Understood, sir.

My second question is, what explains the sharp increase in the gas volume in the quarter and the sustainability of this number in the coming quarters?

SN Goel

Yes, Gas Exchange increase with respect to last year, Yes, there is a significant increase.

But then the numbers are still small in comparison to our expectations.

So, I'm sure in the coming quarters, you will see a much better number.

Mohit Kumar

And how do you see this...

SN Goel

The domestic selling price gas by Reliance was sold for 3-month period in 1 lot, and that also led to significant increase in the volume.

Mohit Kumar

And how significant is the recent PNGRB regulation, which allows only 2 tariff zone compared to, I think, earlier the higher 3 or 4 tariff zone, if I'm right?

What’s your take on that?

SN Goel

Definitely, these regulations are conducive for gas market development.

Initially, there used to be 4 zones, then it became 3, now it is 2.

And in fact, like in the power sector, we have injection and draw charges, so in the gas sector also invariably, it is only entry and exit tariff.

So, we are going towards that slowly.

That's a good thing.

Moderator · Conference Operator

The next question is from the line of Rishabh Shah from BulgeRock PMS.

Rishabh Shah

Sir, I have one question.

The other kind of system of the other competitors.

So both systems.

SN Goel

Slightly louder, please.

Rishabh Shah

Sir the competitor’s systems and our system won't be the same.

So, if a user is comfortable with the platform, what incentive would he have to shift to a new platform?

SN Goel

Your question is not clear.

I think what you are talking about is that if the competitor's platform is not similar to ours, what benefit we have in shifting there?

Rishabh Shah

Yes, yes, yes.

SN Goel

See, regulator will have to decide about the common platform, the common software and also the IT infrastructure across all 3 exchanges compatible to the requirement of the system.

So, these kind of things can be done only after that.

Rishabh Shah

Okay.

So, can we assume that if these things are not compatible, then this coupling might get removed again, if the systems of the competitors are not compatible?

SN Goel

I mean these are some of the requirements for implementing market coupling.

And I'm sure regulator will implement market coupling after fulfilling all these requirements.

Moderator · Conference Operator

The next question is from the line of Ketan Jain from Avendus Spark.

Indian Energy Exchange Limited July 25, 2025

Ketan Jain

Sir, my first question is just on the competition.

What steps apart from reduction in transaction fee can the competition do to attract customers?

Is it something like reducing subscription fee or margin requirement?

And what stops them to invest in better technology and people.

So, some flavour on this?