ACME Solar Holdings shares rose nearly 7% after HSBC rated it a 'Buy' with a target of ₹350, suggesting a 30% upside.(Pixabay)AI Quick ReadShares of ACME Solar Holdings Ltd surged nearly 7% on Monday, April 13, outperforming weak market trends after global brokerage HSBC initiated coverage with a ‘Buy’ rating and a target price of ₹350, implying an upside of 30%.
HSBC highlighted that ACME currently operates around 3 GW of generation capacity, with an additional ~3.3 GW tied up under long-term, 25-year power purchase agreements (PPAs). These contracted projects are expected to drive a 2.7x increase in overall capacity over the next two to three years.
Beyond this, according to the brokerage, the company has a further 1.8 GW of awarded projects that are yet to be converted into PPAs, providing additional growth visibility. Strategically, ACME is transitioning from a pure-play solar developer to a diversified renewable energy player, focusing on firm and dispatchable renewable energy (FDRE) solutions that integrate solar, wind, and battery storage.
“We forecast EBITDA to grow at a CAGR of 72% over FY26-28. Earnings visibility is strong as 84% of ACME’s contracted portfolio with 25-year fixed tariff PPAs are backed by central government agencies. We also think the company is well placed to benefit from the early adoption of BESS and FDRE projects. Working capital improved to 23 days from 93 days in FY24 due to a fall in receivables, which increases confidence in the strength of its balance sheet,” said brokerage HSBC.
According to HSBC, key downside risks for ACME Solar Holdings include its relatively high leverage, with projects typically financed at an 80:20 debt-to-equity ratio. The brokerage also flagged potential risks from rising equipment and borrowing costs, which could impact project economics. Additionally, delays in commissioning contracted capacity may affect growth timelines, while lower-than-expected power generation could weigh on overall performance and returns.
Additionally, HSBC's report pointed out that renewable energy is already significantly more affordable than thermal power in India, and we anticipate that renewables will receive further support from Battery Energy Storage Systems (BESS) that store energy from solar and wind sources for later use.
According to the report, the implementation of BESS improves grid reliability, lowers energy expenses, and offers backup power, particularly during peak demand in the evening. As BESS prices decline and confidence in their effectiveness grows, we expect an increase in the adoption of renewable energy sources. ACME currently possesses 1.1 GWh of BESS, which enables it to earn extra merchant revenue prior to this capacity being incorporated into more sophisticated firm dispatchable renewable energy (FDRE) initiatives.
According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, shares of ACME Solar Holdings are exhibiting a strong bullish trend, forming a higher top–higher bottom structure and trading above all key moving averages. The stock has gained over 5% with robust volumes, indicating continued buying interest and the potential for further upside in the near term. He highlighted that the recent higher bottom around ₹270 acts as immediate support, while the stock could move towards the ₹300 level in the short term.
Ruchit Jain, Head - Equity Technical Research, Wealth Management, Motilal Oswal Financial Services, said that the stock has recently been forming a higher top higher bottom structure and thus looks bullish. The immediate supports for the stock are placed around ₹261 and ₹250.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players.
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At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors.
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Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation.
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Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.