Ladies and gentlemen, good day and welcome to Indian Energy Exchange Q2 FY 2026 investors' conference call, hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rohan Gheewala from Axis Capital Limited. Thank you, and over to you, sir.
Thank you, Monika. Good afternoon, ladies and gentlemen. On behalf of Axis Capital, I am pleased to welcome you all for the IEX Q2 FY 2026 earnings conference call. We have with us the management team of IEX, which is represented by Mr. Rohit Bajaj, Joint Managing Director; Mr. Satyanarayan Goel, Chairman and Managing Director; Mr. Vineet Harlalka, Chief Financial Officer; Mr. Amit Kumar, Head of Operations, New Product Initiatives and Exchange Technology; and Ms. Aparna Garg, Head Investor Relations and Corporate Communications. We will begin with the opening remarks from Mr. Rohit Bajaj, followed by an interactive Q&A session. Thank you, and over to you, sir.
Good evening, friends. I welcome you all to the IEX Earnings Call for Q2 FY 2026. With me today on this call are Mr. Satyanarayan Goel, Chairman and Managing Director, IEX; Mr. Vineet Harlalka, Chief Financial Officer and Company Secretary; Mr. Amit Kumar, Head of Market Operations and Exchange Technology; Ms. Aparna Garg, Head of Investor Relations and Corporate Communications; and Mr. Aditya Wali. At the macroeconomic level, India remains the fastest-growing major economy in the world, posting a strong GDP growth of 7.8% in the first quarter of fiscal 2026. This trajectory has been powered by strong domestic demand, investment activity, and a steady expansion of all major sectors, including industrial services, agriculture, and construction. The Q1 number offers optimism amidst global political uncertainty, as India remains a source of stability and opportunity in the international landscape.
The India Meteorological Department has reported 8% higher rainfall during this year's monsoon, the highest rainfall in five years. This good monsoon is likely to strengthen the agriculture sector, potentially lifting rural incomes and supporting broader consumption trends. In addition, fiscal policy measures to reduce the GST and simplify compliances are expected to further support economic activity going forward. Consequently, the RBI has revised India FY 2026 GDP growth forecast to 6.8%, up from its earlier forecast of 6.5%. On the power sector front, weather continued to play a key role in this quarter as well. Electricity demand growth during the second quarter remained moderate, with a power demand of 449 billion units, higher by 3.4% on year-on-year basis. In the first six months of FY 2026, however, power demand has remained largely flat at 894 billion units, compared with 886 billion units in H1 FY 2025.
On the fuel side, ample fuel has been available at competitive prices. India's coal production reached 203 million tons in the second quarter of FY 2026. At nearly 450 million tons, production in the first six months of FY 2026 has also remained similar as compared with Q2 FY 2025. The coal inventory as of today, as of October 2025, stood at nearly 20 days. For the quarter, imported coal price for 4,200 GAR coal declined to $42 per ton, a decline of nearly 19% compared with the same quarter last fiscal. For Q2 FY 2026, prices of imported gas remained favorable at nearly $12 per MMBtu, compared with $13.6 per MMBtu in Q2 FY 2025. Overall, the fuel situation for the sector has remained comfortable. Let us now talk about a few important regulatory updates and policy initiatives.
Recently, key amendments were proposed to the Draft Electricity Act Amendment 2025, wherein State Electricity Regulatory Commissions have been specifically empowered to determine tariffs suo motu to ensure timely cost recovery and avoid delays. Cross subsidies are to be progressively eliminated within five years for sectors such as manufacturing, railways, and metro operations. In a push for C&I and open access consumers, Discom may be exempted from their obligation of supplying to commercial and industrial users with 1 MW and above load. One of the Discom in the area shall be assigned as a supplier of last resort. The proposal should open up Discom resources for supply, avoid tying up stranded power, and enhance competitiveness of the C&I segment. The draft provides for a specific penalty of INR 0.35 to INR 0.45 per unit for RCO non-fulfillment.
Further, the draft also allows for C ontract for Difference (CFD)-based products for the development of the market. In an earlier order, CERC streamlined pre-defined time slots for trade under TAM contracts across exchanges. Public consultation for these pre-defined slots has been conducted, and the final order has been reserved by the CERC. The regulator also proposed modification in the price discovery mechanism of the Day-Ahead Contingency segment from the current continuous matching to uniform price step auction through draft amendments in the Power Market Regulation 2021. Stakeholder comments on these amendments have also been completed. This order will help improve liquidity in TAM and DSC segments. CERC had issued draft guidelines for Virtual Power Purchase Agreements (VPPAs) earlier this summer. Consultation and due proceedings with regard to this have been completed. The draft recognizes power exchanges as authorized platforms for sale of electricity by RE generators under VPPA arrangements.
Renewable generators entering VPPAs may sell the electricity component in the collective segment on the power exchanges. This would help increase volume on exchanges. In another development in reference to the carbon market, the CERC issued draft regulations for trading of carbon credit certificates for both obligated as well as non-obligated entities through power exchanges. The stakeholder consultation has been completed, and final regulations are likely to be issued in due course. Further, greenhouse emission intensity targets have been notified for 271 obligated entities across sectors such as aluminum, chloralkali, cement, and pulp and paper. The final notification regarding this has been published by the Ministry of Environment, Forest, and Climate Change after conducting stakeholder consultations. This development marks an important milestone for commencement of carbon credit certificate trading on power exchanges in the near future.
In August, the CERC issued amendments to General Network Access (GNA) regulation, introducing network access for solar and non-solar hours for all RE-based projects. The amendment aims to tackle the inefficiencies by introducing time-block-based restrictive access to ISTS system, thus aligning capacity allocation with resource generation. These provisions would improve network utilization and optimize costs going ahead. During the second quarter, the MoP issued the final notification on Renewable Consumption Obligation (RCOs). The notification defined RCO fulfillment method to also include RECs acquired under VPPAs , among others, and also provided for fungibility of obligation under wind, hydro, and other components. We have sought CERC's approval to align our green contracts with the revised RCO components. The order in the matter is reserved.
Once aligned, the contract will provide due clarity to the market participants for renewable energy sale or procurement, which may increase renewable energy participation going forward. CERC issued an order on implementing market coupling on 23rd July, in which the regulator decided to initiate the process of implementation of market coupling of Day Ahead Market. This is to be done by January 2026. In the same order, it is mentioned that coupling of Real Time Market (RTM) will be considered at a later stage. The order also talks about running a shadow pilot for coupling of Term Ahead Market and stakeholder consultation for RTM and SCET coupling.
Further, in this order, CERC has directed staff to initiate consultation with Grid India and all exchanges on the operational and procedural aspects of Day Ahead Market coupling, including identifying and proposing amendments required in various regulations. IEX has filed an appeal against this order in the Appellate Tribunal for Electricity (APTEL). The next date of hearing is scheduled on 28th November. Now moving to the performance. During Q2 FY 2026, IEX recorded electricity trading volume of 35.2 billion units, a YoY growth of 16.1%. Revenue for the company grew by 9.2% year-on-year, increasing from INR 167.8 crore in Q2 FY 2025 to INR 183.3 crore in Q2 FY 2026. Profit after tax increased by 13.9%, rising from INR 108.3 crore in Q2 FY 2025 to INR 123.4 crore in Q2 FY 2026.
In Q2 FY 2026, nearly 44 lakh renewable energy certificates were traded, lower than nearly 63 lakh certificates traded over the same quarter in FY 2025. The RTM segment continues to demonstrate strong growth with a 36% share in volume at IEX , surpassing the share of the DAM segment for the first time ever. For Q2 FY 2026, RTM volumes at nearly 15 billion units were higher by 39% on a YoY basis, highlighting the segment's critical role in helping Discoms and open access consumers efficiently manage short-term needs. RTM 's ability to offer flexibility and immediate responsiveness underlines the opportunity to efficiently integrate renewables with the grid. Green market volume in Q2 FY 2026 rose 17.7% on a YoY basis to 3 billion units compared with Q2 FY 2025.
This segment advances the integration of clean sources such as solar and wind into the grid and helps obligated entities, including discoms, meet their renewable purchase obligations. With an increase in hydro, wind, and sustained supply from coal-based generation, supply liquidity on power exchanges improved and led to a substantial drop in prices in Q2 FY 2026. Sell bids in the Day Ahead Market of IEX increased by 39.3% on a YoY basis. As a result, the average Day Ahead Market price was INR 3.93 per unit, down 12.5% on a YoY basis, while the price in the Real Time Market averaged at INR 3.51 per unit, a 16% drop. With regards to our product pipeline, we continue to await approval from CERC on our petition to extend Term Ahead Market contracts from three months to eleven months.
As regards to Green RTM , CERC has reserved an order on IEX 's Green RTM petition. Green RTM would provide an opportunity to reduce deviation exposure due to weather events by providing an avenue to trade green power one hour in advance. Further, to facilitate merchant storage capacity in the country, we have filed a petition with CERC for the introduction of peak DAM and peak RTM segments. This segment would facilitate the trading of power during high-demand hours, such as late evenings and early mornings. Stakeholder consultations on the same have been completed, and the matter awaits further proceedings. Moving on to IGX volume, IGX traded cash volume of 16.1 million MMBtu in Q2 FY 2026, a growth of nearly 37% over Q2 FY 2025.
Led by volumes from domestic gas producers and heightened power demand during the months of August and September. For Q2 FY 2026, IGX recorded a profit after tax of INR 9.6 crore, which was higher by 57% compared with INR 6.1 crore in Q2 FY 2025. As gas prices continue to remain stable and policy initiatives continue to remain positive in the sector, volume-set IGX would continue to be robust. The arrival of early and prolonged monsoon-displaced fiscal moderated power demand. Nonetheless, with the CEA's forecast of power demand at 366 GW by 2032 and power consumption to reach nearly 2,500 BUs, demand growth will continue to drive exchange volume. In response to this expected demand growth, the MoP has been regularly monitoring the roadmap of thermal capacity addition of 80 GW by 2032.
Recently, the country's leading power producers also outlined an investment plan to increase their thermal capacity by over 50 GW by 2032. In addition, policy measures undertaken by the government and regulators to ease supply-side liquidity are expected to further rationalize power prices on the exchange. The power sector is undergoing rapid transformation with the emergence of innovative market mechanisms such as battery storage arbitrage, firm and dispatchable renewable energy (FDRE), Virtual Power Purchase Agreements (VPPAs), and electricity derivatives. To support battery energy storage systems, the Ministry of Power has finalized two tranches of the viability gap funding mechanism. Nearly 13,200 MWh of BESS projects have been awarded under the first tranche, while tenders for over half of the 30,000 MW projects in the second tranche under VGF have already been issued. As per the CEA, BESS-based storage of 47 GW is to be made available by FY 2032.
The reduction in battery storage cost has also accelerated the government push for BESS. As recently as October 2025, RUVNL discovered INR 1.78 lakh per megawatt per month for a 1,000 MW 2-hour-2-cycle tender under the VGF mechanism. This is the lowest price ever discovered for BESS under the VGF mechanism. As mentioned on the earlier occasion, BESS would be able to store surplus solar power during daytime to deliver electricity during hours of peak demand by leveraging power exchanges. This would increase liquidity and potentially increase volume on exchanges during daytime as well as during evening hours. These developments are poised to become key enablers in expanding and deepening the country's power market toward a successful energy transition. Our diversification initiatives are also gradually gathering momentum.
For Q2 FY 2026, the International Carbon Exchange (ICX) issued 38 lakh IREX, adding to a cumulative of 82 lakh IREX issuance in the first half of FY 2026, surpassing 59 lakh IREX issued in FY 2025. Revenue for ICX in Q2 FY 2026 stood at INR 193 lakh . The IREX is a globally recognized digital certificate that serves as a transferable proof of generation of 1 MW of energy from renewable sources. With regards to the coal exchange, the Ministry of Coal has been exploring options for market development in the coal sector and has created enabling provisions under the Mines and Minerals Development and Regulation Act to set up mineral exchanges. Recently, draft rules have been issued for appointing coal controllers as a regulator for the coal exchange. IEX has been working with the stakeholders to explore setting up the first coal exchange in India.
As India advances towards its net-zero goals, energy exchanges are expected to play an increasingly significant role in shaping the nation's energy ecosystem. Thank you, and now we can have questions and answers.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ketan Jain from Avendus Spark . Please go ahead.
Thank you. Thank you, sir. Good afternoon. So my first question is on the status of implementation of market coupling. What is the progress on the ground in terms of operational details?
Were you guys asked to make a software, or what has been the progress, and is it on time to get implemented by January 2026?
Good afternoon. With regard to the status of market coupling, we are not aware about any developments which have taken place so far. What we understand is that for working out details for implementing market coupling, there will be discussions which will be required with the exchanges, with Grid India, and procedures will be worked out, and regulations amendments will be done. Maybe those drafts will be issued for public consultation. To the best of our knowledge, so far, nothing like that has happened.
We were not contacted by the regulator or Grid India for developing any software. It is still no contact from them.
We are not aware of any such program, I mean, program about how they want to implement it and when they want to implement it.
Understood. Sir, also, if you could provide us with how IEX will play a role in coal exchange and in the carbon exchange, if there is any development in that.
As far as carbon trading is concerned, as per the regulations, CERC is the regulator for the carbon credits. The trading of carbon credits will happen on all the three exchanges which are regulated by CERC. That means the existing exchanges, IEX, PXIL, and HPX, will be able to do the trading of carbon credits. Coal exchange, yes, the Ministry of Coal is in the process of issuing the rules for this, and they will make Coal Controller of India as the regulator for this thing.
They will have to draft regulations and do public consultations and finalize regulations. Thereafter, interested parties can apply for the license of coal exchange. As we told in the past also, we are definitely interested in this area, and we are doing necessary preparatory work. As and when regulations are notified, we will apply for this also.
Understood. My last question is on the volume growth, sir. We've been doing 16% electricity volume growth in Finland. What is your guidance on FY 2026? How will we end? Next year, what's your volume guidance for electricity volumes?
I mean, so far, in the first half of the year, the demand in the country has been practically flat. In spite of that, we have done a volume growth of almost about 16%. For the remaining period also, we expect reasonably good growth.
I mean, we should be able to maintain a growth between 15%- 20%.
For FY 2027, sir, any view on that?
It will be difficult to say at this stage. It all depends on the sector, how the demand will work out, weather conditions, what those will be. I mean, we are saying that we have been achieving a growth of, on average, almost about 20% growth in the last five years. We should be able to achieve that. India is a growing economy, developing economy. If we have to grow at a rate of 6% to 7% in the GDP, definitely the electricity demand is also going to grow. As far as. Electricity is concerned, you know, the whole electrification of the economy is happening. A lot of things are happening in the electricity sector, EVs and data centers. Now the batteries are also becoming commercially viable.
A lot of storage is happening. If that happens, then the daytime surplus power can be stored, and in evening hours, the power can be used from the batteries. The exchange will definitely play a very critical role in all these activities. I'm sure growth potential, what we have achieved in the past, we should be able to sustain in the future also.
Understood. Thank you and all the best, sir.
Thank you.
Thank you. The next question comes from the line of Sumit Kishore from Axis Capital. Please go ahead.
Good afternoon, sir. This is Sumit here from Axis Capital. My first question is, the power. Last fiscal power demand growth was 4.2% to 4.3%. This year, first half has been flattish. How much of this is really attributable to weather? In your opinion, is there a slowdown versus what was expected for the C&I power segment also?
What is your impression?
It was mainly because of the weather. Right from April 'til October, we are seeing very good rains this time in the country, and there is a surplus rainfall in the country. As a result of that, the agricultural demand has crashed. The summer demand, the domestic demand also, was much lower than what it was expected. Grid India's estimate was a peak demand of 277 GW. Against that, only about 250 GW was the peak demand. Looking at all these things, it was mainly because of the weather conditions. C&I side, we don't see any reduction in demand. Rather, there is an increase in demand. I don't have the data about what is the actual increase in industrial consumption.
Right. The second question is that basically over this period, the power demand growth has been muted.
Over the last one year, installed capacity has grown by almost 9% to 10%. Using solar, say in the DAM segment also, the sell bids are far, far exceeding the purchase bid volume and what is finally cleared, and the exchange prices are lower. To what extent can this continue? Would there be curtailment of, or what kind of curtailment of power is happening? What can exchanges do to reduce this? You also spoke about capacities coming up for Virtual Power Purchase Agreements. There would be even more sell bids on the exchanges. Why aren't customers taking benefit of the lower tariffs during these solar hours? Why isn't more power getting cleared on the exchanges?
I agree with you. I mean, capacity addition is happening, and daytime prices are coming down. This stability in the system will need some time.
Today, the need of the hour is capacity addition that is happening. Solar power is cheaper. It is cheaper than even variable cost of the coal-based power plants. We need to do solar capacity addition. When the exchange clearing prices are lower during the daytime, we are seeing a lot of demand shifting during the daytime. If you see the demand curve of the country as a whole, earlier, the peak hour used to be in the evening hours. Now the peak hours are during the daytime. The demand shifting is also happening now. Not that demand shifting is not happening. People are making use of this daytime cheaper power. To make use of this now, in the last one year, a lot many battery tenders were also awarded so that batteries can use this cheaper power during the daytime and sell in the evening hours.
All these kinds of things are happening now. These things will need some time to balance out and make use of the cheaper daytime cheaper power. In the short run, yes. In the short run, yes. Lower power during the daytime may continue. That's good for the market. That's good for the market and exchange. Our volumes are more during the daytime than in the evening hours.
Sure. Sir, you mentioned that for the first time, RTM volumes have surpassed DAM in the mix in the first half of the fiscal. Is this going to be a sustainable trend? In any case, for RTM, the implementation of MC will happen later depending on the experience from DAM. That's what the market coupling also said. To what percentage in the collective market transactions can RTM's share go up even from here?
RTM volumes this year are higher than the DAM market, mainly because the availability of power on the sell side was much higher. The liquidity was much higher. The clearing prices were lower. RTM prices are practically 10%- 12% lower than the Day Ahead Market price. Many of the distribution companies are taking advantage of these lower RTM prices and purchasing power in the RTM market. As long as the RTM prices are lower, yes, definitely RTM volumes will be higher. With regard to your question on coupling of RTM. If you look at the order, the commission has not taken any view regarding the implementation of RTM. They have said that, looking at the time constants and based on the experience, it will be considered. They will take a view separately on that if required.
Got it.
Just one last clarification on this IGX equity stake that you have, 47.5%. What is the timeline over which this has to be reduced to 26%? What are your thoughts on what are your plans there?
Can you repeat the question, please?
I believe the IGX stake, equity stake, which is around 47.5%, needs to come down over a certain timeframe, I believe, to below 26%. Can you please refresh our understanding on how we are going to go about it?
Yeah. As per the PNGRB regulations, we have to bring down the equity to 25% by December 2025. That is the provision. We have applied to PNGRB for extension of this time because of the past, I mean, there were a few challenges in the gas market and gas exchange. The business ramp-up has not happened at the rate at which we were expecting it. We have applied.
PNGRB regulator was quite supportive, and they have assured that they will give time extension. We are also working out options. We are considering different options for divestment and complying with the regulatory provisions.
Okay. It's only two months away, so they will give extension for one year?
Y eah. We have requested for one and a half year. Let's see.
Thank you, sir.
Thank you. The next question comes from the line of Anand B from Seema Wealth Private Limited. Please go ahead.
Hey, good afternoon. Can you hear me?
Yeah. Good afternoon.
Yeah. Good afternoon. So this couple of questions. First, is the transition of the segment from DAM to RTMs?
In this quarter, we've seen, and especially this half, we've seen compared to the previous half of the first half of the previous year, that is, the percentage of volumes of DAM has reduced from 41% to 35% in this half of this current financial year. RTMs went up from 30% to 36% as well. The DAM market has remained the same. Can you just give a light on why DAM market volume share has remained the same? Where do you see that going forward?
The first thing, the main product for the exchanges are the collective transactions, which is the DAM and RTM. Significantly higher volumes happen only in these segments. As you can see. This year also, the share of collective transactions, which is DAM, RTM, and GDAM, the total share is more than 85% for these three products. It will continue to remain like this.
Term and market transactions, these are bilateral transactions. These transactions happen mainly when there is a shortage of power, and some of the distribution companies want to tie up power to ensure availability of power under the deficit conditions. Fortunately, this year, we had good rains. That is why there is no growth in the DAM transactions.
Even in the RTM segment also, would you say going forward, now considering the market coupling, as you said that the RTMs will be considered. Coupling for RTM? Let's say if RTM coupling is not going to happen, would you say that the RTM share will only increase more and more, whereas the DAM segment would decrease in scope?
I mean, looking at the market energy transition, which is taking place, a lot of renewable capacity is getting added, and there is a large variation in the renewable power generation.
Distribution companies also have to make good these variations on the real-time basis. Even generators, also renewable generators, they also many times sell the surplus power because of the good weather conditions if there is excess generation. Real Time Market volumes under these conditions will continue to increase. Government of India also has mandated that all thermal generators will have to sell their unrequisitioned power in the DAM and RTM market. These generators are able to assess the surplus URS power more accurately in the RTM market. A lot of bids are coming in the RTM market for sale of power from these generators also. Considering all that, I personally believe that, yes, RTM volume will continue to increase in future.
That is one plan. Second, I want to touch upon the virtual PPAs front.
I just want to know the current scenario of how much of that is going forward and what will be the share of the exchanges or what potential the exchanges can have. A share of the virtual PPAs?
Virtual PPAs are normally done by the industries or multinationals when they want to comply with the RPO obligations or their sustainability targets. Under that, what they do is they get into a contract with the generator. They commit them a fixed price. The generator sells power in the market. The difference between the market clearing price and his contracted price is to the account of the multinational who has contracted this. In turn, the green attribute goes to the multinational. Now, under this kind of a contract, what we understand is that, yes, a couple of VPPAs have been signed.
I think almost about 2,000 MW of VPPAs are under operation or under execution, and that power is coming to the market for sale.
2,000 MW of virtual PPAs?
Yes.
Okay.
In any case, most of these VPPAs are for the solar power, and during solar time, in any case, we have a lot of sale available. We have sale available to the extent of more than 50,000 MW. If there are more virtual PPAs, there will be more sale during this hour.
Okay. You're saying in the 2,000 MW of virtual PPAs, the entire share is coming to the exchange or only a certain portion of it?
The entire is coming to the market.
Okay. Any estimates of how much can come to IEX specifically or anybody about it?
Can you repeat, please?
Any idea of how much of that can come to IEX specifically?
No.
In fact, the entire is coming to the IEX because they are mostly selling in the Day Ahead M arket.
Okay. Thank you so much.
Thank you. The next question comes from the line of Vikas Kasturi from Focus Capital. Please go ahead.
Good afternoon, sir. I had a couple of questions. The first one is, when I see the gas exchange prices, I think these are U.S. numbers, we are somewhere close to about $4 per MMBtu, whereas our GIXI prices are somewhere closer to about $11. Why is there so much of a difference between the prices? That is one. The second question was on the carbon exchange. Are there any business development initiatives that we are doing to scale it up, sir? Could you just speak about that? Thank you.
Yeah. In case of the gas market, U.S. prices are based on the Henry Hub.
Henry Hub is an index which is basically determining the gas price in the U.S.A. It is not an international gas trading exchange. It is basically for the transactions happening in the U.S.A. Since the U.S.A. has surplus gas available, their trading price is around $4, $3.5- $4. If that gas has to come to India, then that gas will have to be liquefied, transported, and regasified. The rate for that gas also will work out to be something around $10- $12, which is the rate of the GIXI. Mostly in India, the gas is coming from the Middle East side. Because that is nearer to India, transportation cost is lower. The rate of that gas today is almost about $11. It was about $12, $13 a couple of months back. Is this clear?
Mr. Vikas, you are not audible. Mr. Vikas, please unmute your line.
Let me answer the second question. The second question was regarding market development activities about carbon trading. Regarding carbon trading, CERC has issued draft regulations. Public hearing was held. Order is reserved on the carbon trading regulations. The Ministry of Environment has recently issued guidelines for greenhouse gas emissions for four industries. After that, these industries will have to comply with this. There will be an audit for that, and thereafter, the industries who are overachieving the targets, they will be issued carbon credits. Industries which are not achieving it, they will have to buy the carbon credits. I think all this process will need another one and a half, maybe one to one and a half years. Thereafter, the carbon trading will happen. We are regularly in touch with the different authorities. We are also in touch with the different industries for the trading of carbon credits.
We are doing all necessary preparatory work for this. Thank you.
Thank you. The next question comes from the line of Yashodhan Nerurkar from Ionic Wealth. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I just have two questions. The first is, I mean, I just wanted a clarification. In the event of market coupling, say the entire volumes are split in the ratio of, say, 70%, and the balance to exchanges like 15-15, so will IEX be responsible for clearing the 70% of the volumes? Even if the price is discovered by, say, a third entity like the market company operator, would IEX be responsible for clearing the 70%? Would they be getting paid for all the buys and sales that they have got on the exchange? That's the first question.
The second question is, you always, in every call, talk about the different developments and draft amendments that the regulator has been looking to sort of implement. What is the progress of all these developments, and how soon can we expect some of the key developments to actually materialize, and what sort of benefits would IEX actually accrue from those developments? Is the second question. Thank you.
Your first question was clearing, sir. Clearing of. Yeah, yeah, yeah. Yeah, yeah. Clearing of the volumes, sir. See, whatever buy bids and sell bids will come on the IEX platform, and whatever is cleared after the market coupling, we will settle those bids. Suppose I got sell bid of 500 million units, buy bids of 200 million units.
Out of that, after the clearing, I mean, after the price discovery happened at the centralized location, out of that, my 200 million units of sell bids are cleared and 150 million units of buy bids are cleared. That means I will get from this 200 million units buyers' money I will get from them. I'll get from 150 million unit buyers, and this money I will pay to the sellers who have sold 200 million units. In addition, I will also get money from the other exchangers whose buyers were cleared against the sale from my sellers. There will be inter-exchange settlement also. Whatever volumes are cleared on IEX platform, we will do the settlement for that.
Okay. Perfect. Perfect. That answers my question. Secondly, about the developments and how material would they be, and how soon can we expect the progress to happen in those?
If you look at the government and regulators, everybody is basically interested in the development of the market. There are many such initiatives which are being taken by the government. In the past, also, if you see, the late payments surcharge which came streamlining the payments for the generating companies, that brought in the financial discipline in the sector, and as a result of that, the capacity addition is happening in the country now. There was the amendment in that that all generators will have to sell the URS power on the exchange platform. As a result of that, we are getting a lot of sell bids on the exchange platform. On few days, what we see is in the Day Ahead Market, we get sale volumes of almost about 150 million units to 200 million units.
Similarly, in the RTM , also 200 million- 250 million units kind of sell bids are coming. Now, Government of India has proposed amendment in the Electricity Act, and as per this, again, this is basically for bringing viability in the power sector, improving performance of the distribution companies. If that happens, definitely the demand for the power is going to increase, and this will definitely help exchanges to grow business. Same thing from the regulator also. VPPA provisions were approved. I think two years back, when the GNA was implemented, that has also streamlined all this network connectivity and charges for the short-term transactions. I think all this streamlining is happening. This is keeping in view how to develop the market in the country. Now, we are talking about the capacity market.
If a distribution company does not have adequate capacity, which is required for meeting the demand, how can they buy that capacity? How to develop the capacity market? A lot of these things are happening. These things don't happen every day, but it's a continuous process, and the government and regulator both are working in the direction of developing the market in the country.
Okay. Fair. That answers my question. Thank you so much.
Thank you. The next question comes from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead.
As far as the legal cases are concerned, what kind of forum are now being represented on this coupling matter? When is the next hearing?
I'm not clear about your first question. The next hearing is on 28th of November.
This is with CERC?
Next hearing is in APTEL, Appellate Tribunal of Electricity. Okay.
Sir, what is the kind of technology changes that we can bring in so that we don't lose much volume even if coupling does happen?
If we are working in the company, what kind of changes in the system do we have to do, what kind of technology support do we need to provide to our customers to create customer loyalty? All those things are being worked out. I don't think on this call it will be possible to elaborate on those things. We are definitely going to take technology intervention to ensure our customer's share.
Okay. Sir, thank you very much.
Thank you. The next question comes from the line of Archit Agrawal from Steptrade Capital. Please go ahead.
Hello. Yeah. Am I audible ?
Yeah. Yeah. You're audible.
Yeah. Sir, my question is, what steps is IEX taking to diversify the revenue stream after market coupling?
Will the revenue decrease?
No. Why are you saying after market coupling, the revenue will decrease? We are making all efforts to ensure that we retain our market share, and volumes are increasing every year. I'm sure.
If you look at, sorry, if you look at the result, right, volume is not significantly increased, right? After this market decoupling, actually, it seems monopoly is not there, right? What I am asking is, my question is,
Please hold the line. Coupling has not happened, okay? Only order has been issued. Coupling has not happened, so there is no change in that. Volumes have increased by 16%. I think you are not keeping track of the results. Better do that and then ask question. Next question, please.
Thank you. The next question comes from the line of Aditya Raval from Exencial Research Partners. Please go ahead.
Good afternoon. Hello.
Good afternoon.
My question is regarding in the quarter two result, electricity traded volume grew by 16.1% year-on-year, but the revenue from operations grew at the slower rate of 10.42% year-on-year, indicating a divergence. Could you please explain the reason behind this gap, is it mainly due to the lower realization or unfavorable product mix, and what steps is the company taking to address this issue going forward?
Electricity volume grew by 16%, and then there is a certificate also. My colleague, Mr. Vineet Harlalka, who is CFO of the company, he will explain to you in detail about this.
When we look at the total volume, the electricity volume increased by 16% during the quarter year-on-year basis, but the certificates, the REC certificates volume was a bit lower.
Secondly, if you can recall, last year in the month of August, we reduced our transaction fee on the certificates from INR 40 to INR 20. During the previous year quarter, the full INR 40 fees were being charged, and this quarter it was INR 20. It's a mix of both, slightly lower certificate volume and the lower transaction fee, which has resulted in the overall operating revenue lower than the increase in the electricity volume. I hope this clarifies.
Yes, sir. Okay. Thank you.
On the electricity side, the increase in the revenue is 16%. On the certificate side, the increase in revenue is minus 53%. As a result of that, total revenue increase was only 10%.
Yes, sir. Yes, sir.
Thank you. The next question comes from the line of Meet from Elimbiq. Please go ahead.
Hello. Am I audible ?
Yeah. Yeah. You're audible.
All the questions have been answered. Thank you.
Okay. Thank you.
Thank you. The next question comes from the line of Chirag from Keynote Capital. Please go ahead.
Yes. Thank you for the opportunity. My first question is, what is the settlement obligation payable as of H1 FY 2026?
H1. The settlement payable list keeps on changing depending upon the volume and price. If you look at the balance, the closing balance as of 30th September , the total payable amount was near about INR 500 crore.
Okay. My second question is related to product-wise market share. Is it possible for you to share that?
Yeah. Mr. Rohit will respond to this question, which can be of the company.
If I talk about Q2, our electricity market share is 84%. Certificate market share is a little above 50%. Overall, it is about 75%.
What we have seen in the past couple of years, product-wise, DAM and RTM is 100%, 99% precisely. In the other TAM segments, it is 35%. Overall, as I said, electricity is 84%.
Got it. Sir, just one thing I wanted to understand. If market coupling goes forward, apart from the tech, are we willing to go into price wars also if that takes place?
Let the coupling happen. We will look at the market conditions and take a call based on that. I don't think we need to decide that thing today itself.
Right. As per you, to reach that,
I can tell you one thing. In the Term Ahead Market, all three exchanges are active, and there also, the price war is not there. I don't see any such situation that after coupling, there will be a price war in the DAM market.
Why should we talk about war, yeah? Let us talk about peace.
Fair enough. As per you, sir, you have been focusing a lot on retention of customers, as you rightly mentioned earlier. Apart from technology, what is the USP that IEX has?
Yeah. It is hard work of the last 17 years because of which we have been able to build this market. The kind of connectivity we have, the understanding we have with our customers, the kind of understanding which we have developed about the requirements of our customers and the value which we provide to them, the market development activities which we have done. I think all these are our USP and we will continue to do all these things. I'm sure this will definitely give us good market share in the future.
Perfect. Just last question from my side.
As there is a new thing that is happening in the market, the electricity derivative market, right? Just wanted to understand what will be the revenue model for IEX in this?
We have an agreement with MCX that they will share a part of their revenue with us because they are doing the settlement based on our trading price. If you look at the volumes which are happening in the derivative market for the month of August, September, October, these are negligible. I don't think at the moment there is any point in talking about the revenue model out of that.
Fair enough. Sir, if you have this clarity, are node-based electricity derivatives taking place, or is there any clarification to that?
I couldn't get your question.
In the U.S., the electricity derivative market has been very flourished because of the node-based electricity derivative.
If there is a node in Los Angeles, per se, derivatives are traded based on that node. I just wanted to understand, is such kind of derivative in place?
In the U.S., the electricity market is different, and that is why derivatives are also based on the nodes. In India, you can sort of have uniform transmission price within a state. The derivatives are also based on that. These are basically general. U.S. and India markets are quite different. In India, the derivatives are based on the market clearing price of the Day Ahead Market, and that is one price, you can say.
Fair enough, sir. Thank you. Thank you for the answers.
Thank you. The next question comes from the line of Krishna Satija from Smart Sync Services. Please go ahead.
Good afternoon, sir.
Good afternoon.
Sir, all major questions have been answered, but another small question I have.
I'm so sorry to interrupt you, Mr. Krishna, but your voice is muffled. Can you please speak through handset?
Okay, sure. Am I audible now? Am I clear now?
Yeah. Yeah. I don't know.
Okay, sir. Sir, major questions have been answered, but a small query. Once the carbon trading certificate gets yes nodes from all regulations and all that, like you expect from one and a half years from now, how significant volume can we expect from that? How significant can they affect the financials?
It's difficult to say that because it depends on to what extent industries are able to comply with the GHG gas emissions norms. If everybody is complying, then there is no trading. If few are complying, over-complying, and few are not complying, then yes, the trading will happen. It all depends on that.
Looking at the trend in the past for the ESCerts analysis , we believe that the market could be as big as the REC market.
Okay. Okay. That's from my side. Thank you.
Okay. Thank you.
Thank you. We will take that as the last question for today's call. I would now like to hand the conference over to the management for closing comments.
Thank you, friends. I would like to thank each one of you for being part of today's call. Throughout the second quarter, we witnessed efforts from the government and regulators to establish a favorable policy and regulatory climate to develop the energy sector. We at IEX remain committed to contribute to the development of a sustainable and energy-efficient future for India. Thank you so much. Have a great evening. Thank you.
On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.