For the last couple of months, power stocks have been at the forefront for investors’ demand. From specialized financial stocks in the power space such as Power Finance Corporation Ltd (NS:) and REC (NS:) to direct power infrastructure developers and transmission companies such as Adani Transmission (NS:) and Power Grid Corporation (NS:), the entire power supply chain has seen a massive demand from investors.
One stock that has delivered a gigantic return of over 230% in 2021 but witnessed a selling spree in 2022 is the Indian Energy Exchange (NS:). It operates as a power exchange and offers an online electricity trading platform for trading, clearing, and settlement operations. The company has a market capitalization of INR 14,615 crores and is currently trading at a P/E ratio of 47.2 and a dividend yield of 1.23%.
In FY22, the company surpassed the INR 400-crores revenue mark for the first time, clocking a 38% YoY growth to INR 491.83 crores. Improved revenue figures also resulted in a noticeable 50.06% YoY jump in net profit to INR 309.26 crores in FY22, again the highest ever. The net income has grown at a yearly rate of 22.18% over the last 5 years. Definitely not bad at all! The FII stake at 20.77% and the mutual funds’ stake at 15.2% also increase the confidence in the company.
Image Description: Daily chart of IEX, showing a gradual trend change
Image Source: Investing.com
The stock has retraced quite noticeably from the 52-week high of INR 318.66 to the current price of INR 164. That’s a massive fall of around 48%. However, as the power demand and sectoral strength are going strong, demand for IEX shares seems to be coming back. For the last 3.5 months, the stock has been trading in a sideways trend, amid a transition from a prior downtrend. As the further fall has been halted, it is clearly reflecting that the supply side of the equation is drying out.
This is a good sign for bulls to make a move and start taking the price to a higher level. Although the stock is still in the consolidation phase and the uptrend hasn’t started yet, it seems like the final leg of selling is over. Currently, the stock is trading 1% up at INR 164.8, by 10:11 AM IST and is yet to deliver a breakout from the current range and may continue to trade in this range for some more time. However, accumulation is definitely going on around these levels which is evident looking at the daily chart. On the upside, INR 176 – INR 180 could be a piece of cake for the stock to reach. Above this resistance, the trend reversal to the upside would be confirmed.
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