Synopsis: A renewable energy player is making steady progress with a strong project pipeline and clear earnings visibility. Ongoing capacity expansion and an improving project mix position it for consistent growth, supported by stable contracts and future opportunities.
The shares of this small-cap company majorly engaged in projects such as solar, wind, hybrid and dispatchable renewable energy projects and is also one of the India’s largest renewable energy independent power producers were in focus after the brokerage firm sees around 30 percent upside potential based on the strong earning visibility.
With the market capitalization of Rs. 15,834 Crores, the shares of ACME Solar Holdings Ltd were trading at around Rs. 261 per share which is 19.4 percent discount from its 52 weeks high of Rs. 324 per share and is trading at a P/E of 31.7 whereas industry P/E stands at 31.2
Brokerage Call
Motilal Oswal Financial Services has given a ‘Buy’ recommendation on the stock, assigning a target price of Rs. 341. This implies a potential upside of around 30 percent from the market price of Rs. 261. The positive view is mainly based on strong earnings visibility supported by a high share of PPA-backed projects, a large under-construction pipeline, expected capacity expansion, and additional upside from battery storage projects which are not yet factored into estimates.
Earnings Visibility & Capacity Expansion
The company currently has a total portfolio of around 8.1GW, which includes close to 3GW of operational capacity and about 5.1GW that is still under construction. One of the key strengths here is that nearly 78 percent of this entire portfolio is already tied up under long-term Power Purchase Agreements (PPAs). This means a large portion of its future revenue is already secured, which reduces uncertainty and gives a clear line of sight on earnings.
On the capacity side, the company is expected to see a strong scale-up. Its operational capacity is projected to grow from around 2.5GW at the end of FY25 to nearly 5.5GW by FY28. This kind of doubling in capacity over a relatively short period is a major growth driver, as more commissioned projects directly translate into higher revenue and earnings.
Financial Growth & Project Mix Advantage
With this strong addition in capacity, the financial outlook also looks solid. The company’s EBITDA and adjusted profit after tax are expected to grow at a CAGR of around 74 percent and 76 percent respectively between FY25 and FY28. This growth is largely driven by the commissioning of projects that are currently under construction. Revenue is also expected to see a sharp jump, supported by the increasing operational base.
At the same time, margins are likely to remain stable, improving marginally from 87.9 percent in FY25 to 88.9 percent in FY28, with a slight improvement over the years. This is because the company is gradually moving towards more FDRE and hybrid projects instead of relying mainly on plain solar projects. These newer types of projects generally offer better tariffs and higher realisations per unit, which supports profitability. As this mix improves over time, it helps the company maintain strong margins even as it scales up.
Execution Strength & BESS Upside
On the execution front, the company is in a comfortable position. It has already secured transmission connectivity for almost all of its 5.1GW under-construction capacity, which is a key requirement for timely project completion. In addition to this, it has a broader connectivity pipeline of around 7.5GW, out of which a part is already secured and the rest is under application. This gives the company an advantage when bidding for new projects and also reduces the risk of delays.
Another important growth trigger is its push into battery energy storage systems (BESS). The company has a total pipeline of around 16GWh in this space and is planning to fast-track execution. It is targeting around 2GWh commissioning in the last quarter of FY26 and another 2GWh in the first quarter of FY27, with a larger goal of reaching about 10GWh by the end of calendar year 2027. These projects are expected to operate under long-term PPAs as well. What makes this more interesting is that this potential has not yet been included in current estimates. The company has indicated that BESS can generate around Rs. 1.7 billion EBITDA per GWh, assuming a certain level of pricing, which means this segment can add meaningful upside if executed well.
Industry Tailwinds
The overall industry environment is also becoming supportive. There has been a slowdown in renewable energy bidding in recent times due to a large number of projects waiting for PPA signings. However, this situation is gradually improving as states start clearing this backlog. Some states have already begun signing new agreements, and this trend is expected to pick up further. As this happens, bidding activity should increase again
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