Detailed Narrative
RTM Surpasses DAM in Market Shift
For the first time in IEX history, the Real-Time Market (RTM) segment surpassed the Day-Ahead Market (DAM) in volume share, reaching 15 billion units in Q2 FY26. This 39% YoY growth in RTM was driven by high supply liquidity and prices that were 10-12% lower than DAM prices. Management noted that distribution companies are increasingly using RTM to manage short-term needs efficiently, with IEX maintaining a near 100% market share in this specific segment.
Regulatory Uncertainty: The Market Coupling Deadline
Despite a CERC order aiming for market coupling implementation by January 2026, management stated they have had no contact from regulators or Grid India regarding software development or operational procedures. IEX has filed an appeal against the coupling order in the Appellate Tribunal for Electricity (APTEL), with the next hearing scheduled for November 28, 2025. The company remains defensive, arguing that their 17 years of customer connectivity and price discovery expertise constitute a significant moat.
IGX Growth and Divestment Pressure
The Indian Gas Exchange (IGX) showed strong performance with a 57% YoY increase in PAT to ₹9.6 crores and a 37% volume growth. However, IEX faces a regulatory deadline to reduce its equity stake from 47.5% to 25% by December 2025. Management has requested a 1.5-year extension from PNGRB, citing a slower-than-expected ramp-up in the gas market, and expressed confidence that the regulator would be supportive.
Revenue Realization vs. Volume Growth
A key point of analyst concern was the gap between 16.1% electricity volume growth and only 9.2% revenue growth. Management attributed this primarily to the REC segment, where transaction fees were halved from ₹40 to ₹20 in August of the previous year. Additionally, REC volumes were lower (44 lakh vs 63 lakh YoY), leading to a 53% decline in certificate-related revenue, which diluted the strong gains from the core electricity trading business.
Diversification into Carbon and Coal Exchanges
IEX is actively preparing for new market opportunities, including a Coal Exchange and a Carbon Market. The International Carbon Exchange (ICX) generated ₹193 lakhs in revenue this quarter from I-REC issuances. Management expects the carbon credit market to eventually match the size of the REC market, though they anticipate a 12-18 month timeline for full regulatory implementation and industry compliance to drive significant volumes.