Indian Energy Exchange Ltd (IEX) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Axis Capital Limited): Ladies and gentlemen, good day, and welcome to Indian Energy Exchange Q2 FY '27 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rohan Ghewalla from Axis Capital. Please Please go ahead.
Rohan Ghewalla (Axis Capital): Thank you. Good afternoon, ladies and gentlemen. On behalf of Axis Capital, I'm pleased to welcome you all to the IEX Q2 FY '27 Earnings Conference Call. We have with us the management team of IEX, which is represented by Mr. Rohit Bajaj, Joint Managing Director; Mr. Satyanarayan Goel, Chairman and Managing Director; Mr. Vineet Harlalka, Chief Financial Officer; Mr. Amit Kumar, Head of Operations, New Product Initiatives and Exchange Technology; and Ms. Aparna Garg, Head, Investor Relations and Corporate Communications. We will begin with the opening remarks from Mr. Rohit Bajaj, followed by an interactive Q&A session. Thank you, and over to you, sir.
Rohit Bajaj (Indian Energy Exchange Ltd): Thank you. Good afternoon, friends. I welcome you all to the IEX earning call for Q2 FY 2027. With me today on this call are Mr. Satyanarayan Goel, CMD, IEX; Mr. Vineet Harlalka, CFO and Company Secretary; Mr. Amit Kumar, Head of Market Operations and Exchange Technology; Ms. Aparna Garg, Head of Investor Relations and Corporate Communications; and Mr. Aditya Vane. Friends, amid global uncertainty and inflationary pressures driven by oil supply volatility, India continues to remain the fastest-growing major economy in the world, having recorded a strong GDP growth of 7.8% in Q1 FY '27.
Rohit Bajaj (Indian Energy Exchange Ltd): Reinforcing this outlook, the IMF recently revised its forecast upwards and projects India GDP to grow by 7% in each of the next two years. This growth trajectory is powered by strong domestic demand, robust services activity, and favorable demographic trends. Notably, this performance comes despite severe El Nino conditions which led to the fourth lowest performing monsoon season this century, with rainfall at just 87% of the long-period average. Looking at the bigger picture, India is steadily progressing toward a 5 trillion economy by FY30, driven by reforms like GST rationalization, new labor codes, and FTAs with the UK, Switzerland, New Zealand, and the forthcoming one with EU and some other countries. Together, they are advancing the vision of a Viksit Bharat by 2047. This growth story will be fueled by electricity at its core. The power sector witnessed sustained demand growth during the first half of the year, supported by strong industrial activity and higher irrigation demand amid a weak monsoon. In the first half of FY27, power demand grew 10.2% YoY to touch 897 billion units. Elevated temperatures due to El Nino and deficient monsoon rainfall drove Q2 electricity demand to 502 billion units, marking a record 11.5% year-on-year increase. While peak demand during the summer reached 271 GW, it remained elevated at 269 GW in September. The demand and supply scenario remained volatile during the quarter. A weak monsoon increased buy bids in IEX day-ahead market by nearly 120% YoY in Q2, pushing up average DAM prices nearly 46% YoY to Rs. 5.72 million per unit, and average RTM price higher by 49% YoY to Rs. 5.24 per unit. With prices touching Rs. 20 per unit in certain time blocks during the quarter, the high-price day-ahead market, HP-DAM, played a critical role by enabling unmet demand bids to transition into the high-price segment, ensuring supply for buyers with urgent power requirements. However, cyclones and unseasonal rains during the later part of the quarter moderated demand in several regions, providing ample supply liquidity and driving RTM prices to near zero in multiple time blocks on a few days. In the first half of fiscal, prices during solar hour touched an average of Rs. 2.3 per unit, pushing up arbitrage opportunity to over Rs. 6.5 per unit for both 2-hour two cycles per day and 4-hour one cycle per day battery storage systems, and providing further opportunity for addition of BESS capacity. On the fuel side, domestic coal production was largely flat at 445 million tons in H1 FY27 compared with H1 FY26. Summer demand strained plant inventories, and weather disruption tightened availability further. As of 22nd October 2026, coal inventory stood at nearly eight days, with stock at about 100 plants at a critical three-days level. The Ministry of Power has been closely monitoring coal stocks and has taken a various measures to improve coal availability, and some of these things can measures can be seen on the ground. Further, MoP has invoked Section 11 of the Electricity Act to direct over 100 captive coal-fired plants, as well as Coastal Gujarat Power Limited, CGPL imported coal-based plant, to maximize generation till 31st December 2026. Let us now talk about few important regulatory updates and policy initiatives during the quarter. Earlier this May, CERC issued a discussion paper on strengthening and scheduling timelines for Real-Time Market. The paper proposes reduction of RTM auction window from 15 minutes to 5 minutes, thereby reducing gate closure time from 75 minutes to 50 minutes. The objective is to enable better forecasting, more efficient management of renewables, and enhance liquidity on the exchange platform. The same has now been proposed in draft Grid Code, IEGC, and public comments on the proposal were invited and closed last week. The CERC issued amendments to the Sharing of Inter-State Transmission Charges and Losses Regulations, 2020, which will encourage open-access consumers to source power from power exchanges.
Rohit Bajaj (Indian Energy Exchange Ltd): providing ISTS charges waiver for up to 25 years for battery energy storage systems integrated with renewable or hybrid generating stations. This should expect- expectedly reduce the cost of power trading for BESS players and increase liquidity on exchanges. In other development, CERC has identified the Green Day Ahead Market as a source of green power for energy storage systems such as BESS and PSP to procure power and meet eligibility criteria to qualify as green storage. This classification should increase trading in G-DAM segment at exchanges. The CEA made draft amendment to technical standards for construction of electric plants and electric lines, second amendment 2026. The draft proposes that solar and onshore wind projects commissioned after July 1, 2027 would have to be equipped with co-located energy storage systems with a minimum two-hour storage duration and capacity equivalent to at least 10% of the plant installed capacity. It further proposes an increase in storage duration for projects commissioned after July 1, 2029 and up to July 30th, 2031. These solar and onshore wind projects would be required to install co-located ESS with a minimum four-hour storage duration with storage capacity equal to at least 10% of the plant installed capacity. These measures would help in grid stability going forward as countrywide renewable capacity increases and provide liquidity on the exchanges. With regards the carbon market wherein Carbon Credit Certificates are to be traded on power exchanges, Bureau of Energy Efficiency at BEE in consultation with Grid India has issued draft procedures for trading of these certificates under the compliance mechanism. In conjunction, IEX has filed a petition with the CERC for approval of Carbon Credit Certificate trading on the exchanges. On market coupling, in July 2025 CERC issued an order proposing implementation of market coupling in the day-ahead market, pursuant to which IEX filed an appeal before APTEL and subsequently in the Supreme Court. Both forums observed that market coupling cannot be implemented by this order and it can only be implemented after the regulations are issued. And hence, IEX is not an aggrieved party yet and they do not wish to interfere at this stage. If IEX is aggrieved by the final regulations, they can approach the appropriate forum, including the grounds raised in this, in the appeal made. Meanwhile, CERC issued draft regulation for market coupling in the month of April and proposed Grid India as the market coupling operator. Submission of comments by stakeholders and public hearing on draft regulation was completed in the month of June. There has been no further development on this during this particular quarter. CERC in its order of July 2025 had also mentioned that in case of Real-Time Market, since the timelines are very tight for bidding and of the and the auction process, this would be considered subsequently. In light of the CERC discussion paper for shortening the scheduling in Real-Time Market, that is reducing the gate closure time from 75 to 50 minutes, where RTM bidding will be reduced from 15 to 5 minutes, coupling is likely to become more challenging. Further over the last 3 years, we have undertaken several initiatives to strengthen our customer relationships and technology capabilities, including extensive customer interactions and feedback, providing API-based bidding tools, back-office integration through APIs, data analytics, enhanced web portal, customer-centric digital solutions, and reinforced cybersecurity safeguards. With our customer-centric initiative, track record of trust, and deep customer engagement, we shall be able to retain and strengthen our market position post coupling. Moving on to IEX's performance in this this quarter. During Q2 FY '27, IEX recorded electricity trading volume of 39.7 billion units, a year-on-year growth of 12.7%. For H1 FY '27, electricity traded volume reached 77 billion units,
Rohit Bajaj (Indian Energy Exchange Ltd): in Q2 FY'27 profit after tax increased by 12.9% rising from rupees 123 crore in Q2 FY'26 to 139 crore in Q2 FY'27. In Q2 FY'27 15.3 lakh renewable energy certificates were traded considerably lower than 44 lakh certificate traded over the same quarter in FY'26. The RTM segment continued to demonstrate strong growth with nearly 42% share in electricity volume at IEX surpassing the share of the DAM segment for the second quarter in succession. The segment witnessed the highest ever single-day volume of 315 million units during the month of September. For Q2 FY'27 RTM volumes at nearly 16.5 billion units were higher by 10.5% on year-on-year basis, highlighting the segment's critical role in helping distribution companies and open access consumers efficiently manage their short-term requirements. RTM's ability to offer flexibility and immediate responsiveness underlines the opportunity to efficiently integrate renewables with the grid and weather-related volatilities. With regard our product pipeline, we continue to await approval from the CERC on our petitions to extend the Term-Ahead Market contract from 3 months to 11 months, to introduce the Green RTM contract and third with regard to introduction of Peak DAM and Peak RTM segments. Moving on to IGX numbers, IGX traded gas volumes of 42 million MMBtu in Q2 FY'27, a growth of 160% over Q2 FY'26 led by volumes from domestic gas producers and a heightened power demand being met by gas power plants during the month of August and September. In Q2 FY'27 nearly 30% of the traded gas volumes were from the power sector. For the first half of the year traded gas volume reached around 70 million MMBtu higher by nearly 71% over H1 FY'26. For Q2 FY'27, IGX recorded a profit after tax of 23.4 crore rupees which was higher by 144% compared with rupees 9.6 crore in Q2 FY'26. PAT in H1 FY'27 stood at rupees 39.7 crore, an increase of 67.4% over H1 FY'26. As you may be aware, we had filed a DRHP, Draft Red Herring Prospectus, for an IPO of IGX earlier in July this financial year. As per PNGRB regulations, Petroleum and Natural Gas Board, we have to lower our existing holding from 47.3% to 25% by end of December 2026, and the IPO process remains on track. Our other diversification initiatives are also gradually gathering momentum. For Q2 FY'27, ICX Private Limited issued nearly 52 lakh I-RECs, a growth of 38.4% YoY. Issuance in the first half of FY'27 reached 94 lakh, a growth of 15% over H1 FY'26. Revenue for ICX in Q2 FY'27 stood at rupees 2.3 crore, higher by 20.8% on year-on-year basis. I-REC is a globally recognized digital certificate that serves as a transferable proof of generation of 1 MWh of energy from renewable sources. With regards our initiative to build a Coal Exchange in India, IEX has incorporated Indian Coal Exchange Limited as a wholly-owned subsidiary for this purpose. Recently in September, Indian Coal Exchange Limited applied for a license with Coal Controller Organization, CCO, the regulatory body for coal exchanges. Indian Coal Exchange aims to be physically delivered delivery-based coal trading exchange, providing an organized, transparent, and technology-enabled marketplace for coal trading in accordance with the Coal Exchange Rules, 2026. The exchange will facilitate trade at designated delivery points, enabling efficient price discovery and wider market access. Further in line with the government vision of bringing transparency in trade of all commodities, Ministry of Mines has also notified final regulations for a Mineral Exchange. This development is being explored and should provide us
Rohit Bajaj (Indian Energy Exchange Ltd): is another diversification opportunity. With the power consumption forecast to hit nearly 2700 billion units going forward with peak demand of 388 GW by 2032, we believe power demand growth will continue to drive exchange volume growth in the coming few years. In response to this expected demand growth, the MOP has been regularly monitoring the road map of thermal capacity addition, which has now been revised from an earlier 80 GW by 2032 to 115 GW by 2035. In addition, the government and regulators continued to take policy measures to ease supply side liquidity to rationalize power prices on exchange. India power sector continues to experience fast paced transition. The government focus on green hydrogen, data centers, AI economy, electric vehicles, pump storage, battery energy storage, all this will lead to innovation of new products and market segment on the exchanges. Battery energy storage systems and FDRE round-the-clock tenders are getting traction. To further deepen the green market, we have continued to advocate market-based options like CFDs, virtual PPAs, and merchant models for RE capacity addition. And going forward, with large scale rooftop solar, we see emergence of local energy markets and ecosystem where exchanges will play a central role. These developments are poised to become key enablers in expanding and deepening the country's power market to support a successful energy transition. As envisaged by Honorable Prime Minister, India aims to achieve energy independence by year 2047, and as India marches towards its net-zero target of 2070, power exchanges will have a significant role to play in shaping the country's energy ecosystem. Thank you, and now we can move for question and answers.
Moderator (Axis Capital Limited): Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bharani B from Avendus. Please go ahead.
Bharani B (Avendus): Yeah. Am I audible?
Moderator (Axis Capital Limited): Yes, you are audible.
Bharani B (Avendus): Yeah, yeah. Good afternoon, sir. This is Bharani. My first question is on the draft regulations by CERC. In your opinion, why do you think there is no decision yet or any movement there so far and when do you think there will be final regulations that will be coming out on this, sir?
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