ICICI Prudential Mutual Fund raises stake in IEX to 5.22%. Details here

In a strategic move that underlines growing investor confidence in India’s energy market infrastructure, ICICI Prudential Mutual Fund has increased its stake in the Indian Energy Exchange (IEX) to 5.22%. The latest acquisition, as disclosed to the stock exchanges, saw the fund house purchase 6.5 lakh shares of IEX via open market transactions on July 24, bringing its total shareholding in the company to 4.69 crore equity shares.

This uptick in institutional ownership comes at a time when the power trading sector is undergoing significant evolution, driven by digital transformation, regulatory tailwinds, and the rising share of renewables in India’s energy mix.

IEX: A Critical Backbone of India's Energy Market

The Indian Energy Exchange is India’s premier power trading platform that facilitates electricity, renewable energy certificates (RECs), and energy-saving certificates (ESCerts) through a transparent and automated platform. It accounts for a dominant market share of over 95% in the short-term electricity market, catering to a wide base of power generators, distribution companies (DISCOMs), and large industrial consumers.

In recent quarters, IEX has attracted increased interest from institutional investors, thanks to its robust cash flows, zero-debt balance sheet, and potential to benefit from India’s energy transition.

Details of the Transaction

According to the bulk deal data available on the NSE, ICICI Prudential Mutual Fund bought 6.5 lakh equity shares of IEX at an average price of ₹147.09 per share, amounting to a transaction worth approximately ₹9.56 crore.

This marks a continuation of the fund’s gradual accumulation strategy in the stock, reinforcing its positive long-term view on the energy exchange sector.

Market Reaction and Stock Movement

Following the disclosure of the increased stake, IEX shares saw a mild uptick, closing 0.85% higher at ₹148.35 on July 25. The stock has gained over 12% in the past one month, outperforming the benchmark Nifty 50 index, which rose around 4% during the same period.

Analysts attribute the positive sentiment to rising electricity demand, structural reforms in the power market, and expectations of higher volumes in the Green Day Ahead and Term-Ahead markets.

Analyst Take: Confidence in Core Fundamentals

Market experts believe ICICI Prudential Mutual Fund’s move is a strong vote of confidence in IEX's long-term potential.

“This kind of institutional interest suggests the market is starting to price in the future scalability of IEX’s platform, particularly with the push for renewable energy and real-time electricity markets,” said Mehul Desai, senior energy analyst at Prabhudas Lilladher.

“The company’s strong margins and growing participation from corporates and DISCOMs are indicative of a stable long-term growth runway,” he added.

ICICI Prudential's Investment Strategy

ICICI Prudential Mutual Fund, one of India’s largest asset management companies with over ₹6.5 lakh crore in assets under management (AUM), has been focusing on quality midcap and sectoral leaders in recent quarters. Its increased exposure to IEX aligns with its strategy of backing businesses with scalable technology platforms and annuity-like revenue models.

With this latest move, ICICI Prudential joins other institutional players such as HDFC Mutual Fund and LIC Mutual Fund who also hold significant stakes in IEX.

Regulatory Tailwinds Boosting Sector Sentiment

India's power market has been undergoing progressive reforms. The Electricity (Amendment) Bill, the introduction of the Market-Based Economic Dispatch (MBED) model, and increased emphasis on spot markets are expected to improve efficiency and transparency.

Furthermore, the government’s strong push for carbon neutrality by 2070, increasing share of renewables, and digital load management practices are likely to drive higher volumes on exchanges like IEX.

“As the penetration of renewable energy grows, so will the need for short-term balancing mechanisms. Exchanges like IEX will be at the center of this evolution,” said Neha Batra, power market strategist at JM Financial.

Investor Outlook: Medium-to-Long-Term Play

While IEX's stock has shown volatility in recent quarters, primarily due to regulatory overhang and margin compression, the long-term outlook remains strong. The company’s efforts to diversify offerings—such as trading in gas and carbon credits—could open new revenue streams.

Many fund managers suggest that IEX presents a steady compounder opportunity, especially for investors with a 3–5 year horizon.

“We believe the worst is behind for IEX in terms of regulatory clarity. With more corporates opting for green energy procurement and real-time trading models, the platform is poised to scale significantly,” said Ritesh Kothari, fund manager at Quant Mutual Fund.

ICICI Prudential Mutual Fund’s increased stake in IEX underscores a growing institutional appetite for companies at the confluence of energy, technology, and infrastructure. As India advances toward energy independence and cleaner power sources, IEX stands to benefit from its first-mover advantage and well-established network.

The move also signals a broader theme among Indian mutual funds — favoring businesses with strong cash generation, scalability, and monopolistic or duopolistic market positions. With regulatory support and rising power demand, the energy trading sector may be entering a new phase of institutional participation and capital appreciation.