ACME Solar stock likely to rise 27.5%, says Elara Capital

Elara Capital has initiated coverage on ACME Solar Holdings, a key player in India's renewable energy sector, with a 'Buy' rating, indicating a potential upside of 27.5% and a target price of ₹325. The brokerage highlights India's push to increase renewable capacity to 500GW by FY30, emphasising ACME Solar's strategic positioning and robust project pipeline. Currently operating 2.8GW, the company plans to expand to 7.0GW by FY28.

Elara Capital states, “ACME Solar’s focused shift into firm and hybrid renewable solutions makes it a critical player in addressing India’s demand for reliable clean energy.”

Financially, Elara Capital projects significant growth for ACME Solar, with revenue expected to reach ₹63 billion by FY28, reflecting a 49% CAGR. The firm's EBITDA is projected to grow at a 66% CAGR over the same period. The stock, trading at 8.3x FY28E EV/EBITDA and 13.2x P/E, is seen as undervalued given its growth prospects.

Elara Capital adds, “We believe ACMESOLA is well-placed to capture the next wave of growth in India’s green energy sector.” The company's expansion into firm and dispatchable renewable energy projects is noted as a key driver for future growth.

ACME Solar's stock closed at ₹258.3 today, 12% below its IPO price and 13% off its 52-week high of ₹292. Despite recent volatility, including a 2.2% recovery in July, Elara highlights the aggressive capacity expansion strategy as pivotal for growth. The brokerage reiterates, “The aggressive capacity expansion strategy will be a key growth driver, as the company consolidates its position in India’s clean energy ecosystem.” This strategy is expected to strengthen ACME Solar's market presence and enhance returns, aligning with India's clean energy goals.