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Investing.com - Bernstein SocGen Group downgraded Indian Energy Exchange (IEX:IN) from Market Perform to Underperform on Monday, while reducing its price target to INR99.00 from INR122.00.
The downgrade follows what the research firm describes as a regulatory order on market coupling that could have severe negative implications for the company’s business model. Bernstein SocGen indicated it considers the impact to be "even worse" than its previously negative outlook on IEX.
The firm believes IEX is unlikely to successfully challenge the regulatory order since it aligns with power market regulations established in 2021. Additional negative catalysts include an upcoming transaction charge discussion paper and the potential entry of new competitors as barriers to entry diminish.
Bernstein SocGen noted it has maintained one of the most bearish views on IEX among analysts for approximately three years, with a brief exception during the past month when the exchange showed strong trading volumes. Even during this more positive period, the firm’s highest price target for IEX was INR160.
The research firm initially believed regulatory clarity might make the stock investable after a correction, but now suggests "this might not be the end of bad news for the company," indicating further challenges may lie ahead for the Indian power trading platform.
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