ACME Solar Holdings Share Price Target at Rs 347: Motilal Oswal Research
Motilal Oswal Financial Services has issued a BUY recommendation for ACME Solar Holdings, projecting a robust 39% upside with a target price of Rs 347 per share. The research underscores the company’s impressive execution capabilities, pipeline visibility, and improving financial metrics, positioning ACME as a formidable player in India’s renewable energy sector. Investors are advised to capitalize on the strong commissioning track record, reasonable valuations, and key catalysts such as new capacity additions and potential reductions in borrowing costs.
ACME Solar Holdings Powers Ahead on Execution and Valuation Comfort
ACME Solar Holdings has emerged as a leader in India’s utility-scale renewable energy landscape, propelled by aggressive project commissioning and prudent capital management. Motilal Oswal’s latest research signals a BUY call, citing a 39% potential upside from current levels, anchored by a pipeline of 6.9GW and a disciplined approach to capex. The company’s operational capacity has more than doubled since its IPO, and EBITDA projections have been upgraded on the back of accelerated project timelines and cost efficiencies. With a target price of Rs 347 and clear catalysts on the horizon, ACME Solar is positioned as a compelling investment for those seeking exposure to India’s green energy transition.
Strong Project Execution Underpins Growth Trajectory
ACME Solar’s operational capacity now stands at 2.9GW, up from 1.3GW at the IPO, reflecting a stellar execution record. The company has commissioned 1.6GW in recent quarters, alleviating investor concerns regarding its ability to deliver on an ambitious 4GW project pipeline. This operational momentum has translated into improved earnings visibility and robust cash flows, with an annualized EBITDA potential of approximately Rs 81 billion once the entire 6.9GW pipeline is commissioned.
Capacity additions are expected to continue at pace, with 0.45GW, 1.9GW, and 0.83GW slated for commissioning in FY26, FY27, and FY28, respectively. Management anticipates the full pipeline to be operational by the end of FY29, cementing ACME’s position as a renewable energy heavyweight.
Financial Upgrades and Capital Discipline Drive Valuation Upside
Motilal Oswal has raised its FY28 EBITDA estimate by 7%, reflecting earlier commissioning of key projects and lower capex assumptions due to declining battery and solar module prices. The Sikar Solar project (300MW) is now expected to come online in FY28, while the overall capex requirements across the pipeline have been reduced, resulting in a downward revision of FY27 net debt to Rs 367 billion (from Rs 404 billion previously).
Leverage metrics are improving, with the Net Debt/EBITDA ratio projected to fall to 6.4x by FY28, compared to the earlier estimate of 7.8x. This deleveraging is expected to enhance balance sheet resilience and provide a margin of safety for investors.
Key Catalysts: Project Commissioning and Lower Borrowing Costs
The commissioning of 1.9GW in FY27 is identified as a major catalyst for the stock, with 78% of FY26’s targeted 450MW already operational. New project wins and further reductions in borrowing costs could provide additional upside. Notably, 70% of ACME’s gross debt is on floating rates, so a 25 basis point reduction in average interest costs could boost FY26 PAT by 4%.
Investors should monitor execution milestones and interest rate trends, as both have direct implications for earnings and valuation.
Valuation: Attractive Entry Point Relative to Peers
ACME Solar is valued at 10x FY28E EBITDA (discounted by one year), translating to a target price of Rs 347 per share—implying a 39% upside from the current market price of Rs 249. The stock trades at 8.9x FY28 EV/EBITDA, offering a reasonable margin of safety given its PPA-backed capacity ramp-up and strong execution credentials.
In the last three months, ACME’s share price has outperformed NTPC Green by 24%, a testament to its superior project delivery and operational discipline. While ACME commissioned 1.6GW since its IPO, NTPC Green fell short of its 3GW target, highlighting ACME’s relative execution strength.
Financial Snapshot and Key Ratios
Below is an HTML table summarizing ACME Solar’s key financial metrics and valuation ratios:
| Metric | FY25 | FY26E | FY27E |
|---|---|---|---|
| Sales (Rs billion) | 14.1 | 22.4 | 39.3 |
| EBITDA (Rs billion) | 12.4 | 19.5 | 34.8 |
| Adjusted PAT (Rs billion) | 2.7 | 4.5 | 6.2 |
| EPS (Rs) | 4.5 | 7.5 | 10.3 |
| RoE (%) | 7.7 | 9.5 | 11.8 |
| P/E (x) | 55.1 | 33.3 | 24.2 |
| EV/EBITDA (x) | 19.1 | 18.8 | 15.2 |
Shareholding and Market Position
Promoters retain a commanding 83.4% stake, with institutional and foreign investors holding 7.1% and 4.7%, respectively. The free float stands at 16.6%, ensuring reasonable liquidity for institutional investors.
ACME’s market capitalization is Rs 150.8 billion, and its 52-week price range spans Rs 168 to Rs 292, offering a favorable risk/reward profile at current levels.
Investment Levels and Targets
Current Market Price (CMP): Rs 249
Target Price (TP): Rs 347
Potential Upside: 39%
Key Support Levels: Rs 168 (52-week low), Rs 249 (CMP), Rs 292 (recent high)
Recommended Action: BUY
ACME Solar—A Compelling Bet on India’s Renewable Energy Future
Motilal Oswal’s BUY call on ACME Solar Holdings is underpinned by a rare combination of execution strength, improving financials, and attractive valuations. Investors seeking exposure to India’s renewable energy revolution should consider ACME Solar as a core portfolio holding, with clear catalysts and a substantial margin of safety supporting the investment case.
