Shares of Indian Energy Exchange (IEX) plunged 26% and were locked in the lower circuit at ₹139.02 on July 2 after the Central Electricity Regulatory Commission (CERC) issued a formal order to begin implementing market coupling from January 2026. The CERC’s plan to implement market coupling has been a major overhang for the company since the idea was floated.
The regulator’s move, while long in discussion, marks a significant shift in the way electricity is traded across power exchanges in India. Under the new framework, a centralised market coupling system will determine a single clearing price for electricity in the day-ahead market, regardless of the trading platform used.
For IEX, which currently dominates spot electricity trading with nearly 85% market share and has long been regarded as the industry’s gold standard for price discovery, this development threatens to eat away its competitive edge.
In simple terms, market coupling refers to the process where all buy and sell bids from different power exchanges are aggregated and matched together, leading to a single, uniform price for electricity at any given moment across platforms. This aims to bring more transparency and efficiency to electricity price discovery in the country. That said, the transition also means that IEX will no longer retain exclusive control over price discovery, a key pillar of its business model.
Brokerage firm Bernstein, which maintained a 'market-perform' rating on the stock, sharply cut its price target by 24% to ₹122, warnings that the regulator’s order as worse and more definitive than previously anticipated. “We were working with a 50% chance of coupling, but now it’s certain from January 2026. We also expect transaction charges to reduce sooner due to rising competitive intensity,” the brokerage noted, pointing to a potential 35% downside from current levels.
The concern for investors goes beyond near-term revenue pressure. With other exchanges now set to participate as market coupling operators and Grid-India acting as a backup and audit body, IEX’s long-standing moat as the go-to platform may end up diminishing. The move is also expected to shift some trading volumes toward rival platforms, further affecting IEX’s financials.
The CERC, in its latest directive, said the market coupling rollout will begin with the day-ahead market and may eventually expand to include other segments, such as the real-time and term-ahead markets. All exchanges have been instructed to share data with both the regulator and Grid-India to facilitate the transition.
Though the broader regulatory rationale hinges on accommodating India’s shift towards renewable energy and achieving its 2030 target of 500 GW green capacity, the timing and finality of the announcement seem to have caught the market off guard.
Meanwhile, IEX is slated to report its quarterly earnings later today. But with regulatory uncertainty now casting a longer shadow over its growth outlook, investors may be left looking beyond just the numbers, to what the management has to offer on the future growth of India’ top energy exchange.
