Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indian Energy Exchange Ltd (BOM:540750, Financial) reported a 15% year-on-year increase in consolidated revenue for Q4 FY24, reaching INR149.3 crores.
- The company achieved a 13.8% growth in traded electricity volume for FY24, crossing the 100 billion unit mark for the first time.
- The average market clearing price in the DAM segment decreased by 18% year-on-year, indicating improved sell-side liquidity.
- The company is optimistic about future growth, expecting a 15% increase in volume driven by rising electricity demand and favorable regulatory measures.
- The Board of Directors announced a final dividend of INR1.5 per share, reflecting strong financial performance.
Negative Points
- Despite the overall growth, the profit after tax for IGX (Indian Gas Exchange) decreased by 18% year-on-year due to lower gas volumes.
- The REC (Renewable Energy Certificate) prices have significantly dropped, which may impact transaction fees and revenue from this segment.
- The company faces challenges in the open access market due to high clearing prices and additional surcharges, affecting industrial consumers.
- There is uncertainty around the launch and potential impact of the carbon market, with policy and regulatory clarity still pending.
- The implementation of market coupling and other regulatory changes could introduce complexities and uncertainties in the future.
Q & A Highlights
Highlights of Indian Energy Exchange Ltd (BOM:540750) Q4 FY24 Earnings Call
Q: The management in the presentation depicts the total installed capacity by various sources renewable energy, coal, etc. If the contribution to power generation by renewable energy remains suboptimal, will there be any business implications for IEX?
A: Renewable capacity addition is not commensurate with generation. However, with the large capacity addition happening in the renewable sector and the government's focus on energy storage systems, we see a large opportunity for the exchange in this emerging scenario. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: Given that the short-term market share in power consumption has increased, but the exchange's share has plateaued, do you see further growth in the exchange's market share?
A: Exchange volume will increase with the increase in the short-term market share. The introduction of long-duration contracts has started shifting bilateral market volume to the exchange platform. We expect the exchange share in the short-term market to increase gradually. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: Could you give us a sense of how in FY24, your market share has panned out in segments other than Day-Ahead Market and the RTM market?
A: In Term-Ahead Market, our market share was about 55%, and in BSE market, it is close to 50%. Overall, our comprehensive market share is 84% for electricity and 83% overall, including certificates. (Rohit Bajaj, Executive Director, Non-Board Business Development, Regulatory Affairs and Strategy)
Q: If you look at the volume growth in Q4 versus the revenue growth that IEX has reported, there is a divergence. Can you give some color around this?
A: In the electricity market, some incentives have been given as per industry practice, which is why the revenue is slightly lower in respect to the volume. This practice is continuing and has not increased in this quarter. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: What is the status of the carbon market you are trying to launch?
A: There are some uncertainties in the carbon market at the moment. We are working with BEE, and we need another 5-6 months for clarity. If there is a good opportunity in the voluntary market, we will go ahead with that. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: Can you speak about any new products that can be introduced in the next 12 months, especially in the electricity market?
A: We have filed for delivery up to 11 months with CRC. Once approved, this will enable shifting of volume from the bilateral market to the exchange platform. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: What is the expected volume growth for FY25, given the tailwind of G&A implementation and the consistent power prices?
A: We expect better volume growth than last year. If the demand in the country increases by 8%, we should be able to grow more than 15%. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: What is your volume growth guidance for the REC segment and green segment for FY25?
A: For the REC segment, we are expecting almost about 25% to 30% growth. For the green segment, we expect a 50% volume growth. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: How do you see the medium to long-term revenue breakup between IEX, IGX, and ICX?
A: IEX volume will continue to increase with the country's power consumption growing at 7%-8%. Gas exchange volumes should increase at a rate of at least 30%-40%. For the carbon exchange, we need more clarity from the policy side. (Satyanarayan Goel, Executive Chairman and Managing Director)
Q: How are we placed against our competitors, and what will be the impact on our margins if market coupling is implemented?
A: Market coupling is a long way to go and involves many complexities. We do not see any immediate impact on our margins. (Satyanarayan Goel, Executive Chairman and Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
