Indian Energy Exchange Ltd - NSE: IEX

Indian Energy Exchange Limited

I bumped upon this company today while I was researching the Power sector related stocks. 

At the outset, I like the methodology or core business that it deals with. 

An Exchange or a Platform where Electricity is TRADED

It took some amount of googling to understand this better... Though I first heard about this, when I was an expat in Chile, one of the pioneers in Energy Sector reformation. 

Took a tour of their official site

Check this: https://www.iexindia.com/Default.aspx

Checked the stock price and other its technicals.. 

Share Price: https://www.moneycontrol.com/india/stockpricequote/diversified/indianenergyexchange/IEE

At the outset, my observations are, 

• It has recovered quick from the Covid-19 low of March 25th and it has gained its pre Covid-19 valuation. 
• P/E ratio looks over rated 31.33
• EPS - 5.94

The P/E ratio, we can't consider in its face value as high.. because we don't have much competitors in this space and therefore comparison or to arrive at industry standard is tough. IEX is a market Leader

The below white papers helped me in understanding the operating & business model of this platform. 

References: 

https://eal.iitk.ac.in/assets/docs/Prasanna_Rao_Electricity%20Markets-IIT%20KANPUR.pdf

https://www.sciencedirect.com/science/article/pii/S2211467X1830124X

Like any exchange they make profits from commissions of the transactions. Also from their admission fees, annual subscription fees etc., (running into lakhs)

Pros: 

1. A growth sector - power, electricity - CONSUMPTION
2. IEX has the early bird advantage
3. Its the market leader
4. The management looks professional - the CEO is a veteran in IT sector
5. Consistent net profit track record
6. No promoters - Professionally managed
7. No Debt - No shares Pledged
8. A glance at the technology (stack) used for their platform is refreshing - Latest tech
9. Down the line, number of transactions will keep growing

Cons:

1. The sector is still heavily controlled by the government - bureaucratic
2. State government Electricity boards have monopolies and many are not ready for change
3. Covid-19 will dent the consumption demand from the industrial space - short term

My choice for Myself:  Going to Buy this and watch closely in the short term. It will be a good long term buy - a multibagger.. #PeterLynch