Buy ACME Solar stock for 35% upside, says Nuvama; here’s why

Nuvama Institutional Equities reaffirmed its 'Buy’ recommendation on ACME Solar Holdings Ltd, maintaining a DCF-based target price of Rs 360, a nearly 35 per cent upside from current levels.   

ACME emerged as L1 at an all-time low tariff of Rs 2.76/kWh for the Rewa Ultra Mega Solar Limited (RUMSL) Unit-2 project in Madhya Pradesh, with a contracted capacity of 220MW.
Nuvama expects ACME to deliver a capacity/OCF CAGR of 40 per cent/57 per cent over FY25–28E (excluding the above project win – LoA awaited), led by a rising high-return FDRE/hybrid mix (49 per cent by FY28E). The unchanged target price reflects confidence in ACME's growth, underpinned by project execution and returns, Nuvama said.

Nuvama said the RUMSL project features a tariff of Rs 2.764/kWh for ACME Solar and a contracted capacity of 220MW. The project is structured to provide cost advantages through bundled infrastructure and favorable terms.

Estimated electricity sales are 835 million units (MU), with 675MU from own generation and the remainder supplied by the off-taker for early morning discharge. Excess energy beyond 220MW, up to 300MW, can be sold at Rs 2.15/kWh, though this is not expected to significantly impact revenue. The project is designed for efficient solar and battery storage utilisation, the brokerage noted.

ACME's arrangement allows for four hours of peak supply—two in the morning (6–9AM), where power for charging battery storage is provided by the off-taker at no cost, and two in the evening (6–10PM) using solar energy. A 95 per cent peak availability factor is stipulated, with penalties at twice the tariff if not achieved, reinforcing operational discipline.

Cost efficiencies are central, with land and grid connectivity for up to 300MW provided as a bundled service at the solar park. This offers major infrastructure savings and mitigates execution risks.