MCX Gets SEBI Nod To Launch Electricity Derivatives

The Multi Commodity Exchange of India Ltd. received approval from the Securities and Exchange Board of India to launch electricity derivatives, according to an exchange filing on Friday.

The electricity derivatives contracts to be introduced by MCX will enable generators, distribution companies and large consumers to hedge against price volatility and manage price risks more effectively by enhancing efficiency in the power market.

"The introduction of electricity derivatives marks a pivotal development in India’s commodities ecosystem," Praveena Rai, chief executive officer of MCX, said. "These contracts will offer participants a reliable, transparent, and regulated platform to manage power price risks, which are becoming more dynamic due to renewables and market-based reforms."

"With India's growing focus on renewable energy and open access power markets, electricity derivatives can serve as a vital bridge between the physical and financial sectors," Rai said.

MCX saw a significant boost in its financial performance for the fourth quarter of fiscal 2024-25, with its consolidated net profit increasing by 54% to Rs 135.46 crore.

Shares of MCX closed 4.49% higher at Rs 7,418 apiece on the NSE, compared to a 1.1% fall in the benchmark Nifty. The stock has fallen 112.86% in the last 12 months and 18.99% on a year-to-date basis.

Out of the 11 analysts tracking the company, seven have a 'buy' rating on the stock, three recommend 'hold' and one suggests 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential downside of 17.5%.