The regulatory development comes just hours ahead of IEX’s first-quarter earnings for FY26, heightening investor anxiety over the company’s near-term outlook.
What CERC Announced
In an order issued late Wednesday, the CERC said it would initiate market coupling in a phased manner, beginning with the Day-Ahead Market (DAM) by January 2026. This move follows extensive consultations with Grid-India and other power sector stakeholders.Market coupling is aimed at unifying price discovery by pooling bids from multiple power exchanges and clearing them centrally. The mechanism is expected to improve efficiency and reduce regional price disparities, but it may also disrupt the existing revenue model for dominant players like IEX.
Currently, IEX operates independently as a leading player in the DAM and Real-Time Market (RTM). The introduction of coupling would mean bids from IEX and other exchanges will now be centrally matched, potentially eroding IEX’s competitive advantage.
Brokerages Split on Impact
Bernstein downgraded its target price to Rs 122 from Rs 160, maintaining a ‘Market-Perform’ rating. The brokerage noted, “Coupling… as bad as it gets,” citing risks to IEX’s transaction charges and market share. “With the moat of liquidity gone, the only way to compete is transaction charge,” it added.UBS, however, maintained a ‘Buy’ call with a target price of Rs 285. While acknowledging the move was a negative surprise, the firm pointed out that the Grid-India report estimated only a 0.01–0.3% benefit in terms of savings or volume cleared. It also noted that RTM coupling would be considered in later phases. In FY25, DAM and RTM together contributed nearly 80% of IEX’s revenue.
Axis Capital highlighted the earnings risk, estimating that had market coupling been in place in FY25, IEX’s EPS could have been around 30% lower due to loss of market share.
Meanwhile, the regulatory update lands just ahead of IEX’s Q1FY26 results, which are expected later today. Analysts and investors will focus on management commentary around the implications of market coupling, expected volume trends, and how IEX plans to adapt ahead of the January 2026 implementation.
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