(Reuters) -Shares of Indian Energy Exchange (IEX) fell nearly 30% on Thursday, as investors grew concerned that a planned overhaul of electricity pricing could increase competition and erode the bourse’s market dominance.
IEX, currently India’s leading platform for spot electricity price discovery, faces pressure following the power regulator’s announcement on Wednesday of a phased rollout of market coupling starting in January.
Under the new system, other power exchanges will also act as market couplers, challenging IEX’s central role.
The stock ended lower for a seventh consecutive session and logged its worst intraday single-day performance since listing in 2017.
Market coupling is an economic model used in energy markets to create a single, uniform price for electricity across different trading platforms or exchanges.
IEX “is currently undertaking a detailed impact assessment of the implications of this regulatory change,” it said in an exchange filing on Thursday.
The order is “worse” than “what we have built in”, and IEX is likely to feel the impact on its market share, says Bernstein. The brokerage, which maintains a “market perform” rating on the stock, cut its target price to 122 rupees from 160 rupees to “reflect (the) full impact of market coupling”.
On average, IEX shares are rated “buy” with a median target price of 215 rupees, per data compiled by LSEG.
The company’s shares closed down 29.6% at 132.32 rupees, swinging to a year-to-date loss of 27.2%.
(Reporting by Hritam Mukherjee in Bengaluru, additional reporting by Nandan Mandayam in Bengaluru; Editing by Nivedita Bhattacharjee and Vijay Kishore)
