Started in 2007, Indian Energy Exchange Ltd (IEX) is a 'power exchange' offering trading in a range of electricity products in India. IEX is India's largest exchange in electricity products trading category. IEX Exchange is an online trading platform which is accessible to registered participants. It promotes efficient price discovery and the opportunity to trade in a variety of electricity products. In addition to trade execution, IEX also offers settlement services, including electronic trade confirmation, access to clearing services and risk management functionality. At high level, the products offered by IEX for trading include:1. DAM (Day-ahead-market) - Electricity contracts in blocks of 15 minutes. The DAM constitutes the majority of the energy contracts that are traded on IEX. IEX has market share of 99.6% in DMA trading.2. TAM (Term-ahead-market) - Electricity contracts for fixed terms in the future, such as intra-day contracts, day ahead contingency contracts and contracts up to 11 days ahead and3. RECs (Renewable energy certificates) IEX is amoung 2 exchanges in India that offer an electronic platform for the trading of electricity products. IEX has over 5800 participants registered on its Exchange of which over 3,500 participants were active as of March 2017. On performance front, IEX has posted total revenue/net profits of Rs. 173.99 cr. / Rs. 91.95 cr. (FY14), Rs. 176.38 cr. / Rs. 90.02 cr. (FY15), Rs. 200.14 cr. / Rs. 100.34 cr. (FY16) and Rs. 237.42 cr. / Rs. 113.57 cr. (FY17). For Q1 of the current fiscal, it has reported net profit of Rs. 30.63 cr. on total revenue of Rs. 61.66 cr. It has posted an average EPS of Rs.34.84 and average RoNW of 39.25 for last three fiscals. Issue is priced at a P/BV of 16 plus. If we annualize latest earnings and attribute it on post issue equity then asking price is at a P/E of 40 plus. It has no listed peers to compare with. Though pricing of the IPO raises concern, its track record and bright prospects leaves some room for new investors. IEX's revenue posted CAGR of 14.5% for last five fiscals. It's PAT margins are near 49% for all these years.. On BRLM's front, three merchant bankers associated with the offer have handled 44 public issues in the past three years out of which 12 issues closed below the issue price as on listing date. As per financials, company's growth is good, RoNW is 39.25% for last three fiscals and issue is fully priced. As Government is very much concerned to improve generation of electricity and provide electricity to every home, so future looks bright. We give SUBSCRIBE rating to this IPO.
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