Good evening everyone,
I wanted to jot down a few clear bullet points as to why I invested (and intend to stay invested) in IEX. Please see below:
• Currently, only 7.5% of the total power generated in India is traded on energy exchanges; the government hopes it can jump to 25% by 2024
• Indian energy consumption itself is growing by leaps and bounds
• Limited competition, with PXIL and HPX
- With the highest number of market participants on IEX, along with the fact that the size of the pie itself is growing, I am not too concerned about the competition
• Potential to expand to neighbouring countries
• Range of products and services (TAM, DAM, RTM, REC, ESC)
• Potential increase of term in TAM to 90 days – commenced Jul 2022
• Potential of derivatives products
• MBED policy potential – If implemented, all traded power would have to go through exchanges – removing brokers from the equation
• IGX – hidden gem – play on increased use of natural gas, and the government encouraging its trading domestically
• Immaculate financials (screener.in snapshot)
- 47x P/E
- RoCE, RoIC and RoE of 63.29%, 68.29% and 48.55%, respectively
- Nearly debt free
- 5-year revenue CAGR of 16%, and a 5-year profit CAGR of 24%
• FY22 EBITDA margin of 87.45%!!
I am excited to see where the scrip goes. I have a big bias for platform companies, and unlike some FCF negative VC-incubated companies that are now public, this company is a cash generating machine.
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