With a target price of Rs 319, analysts forecast an upside potential of 25.5% from the previous closing price of Rs 254 on the BSE. ACME share price has risen nearly 37% in the last one year.
The brokerage said that the company is in the middle of a structural step change – evolving from a mid-sized solar developer into India’s leading Firm and Dispatchable Renewable Energy (FDRE) player, powered by solar-wind-storage hybrid solutions that deliver round-the-clock clean power.
Here are 4 growth levers highlighted by Investec that bode well for the company
Strong pipeline – The company has a strong growth pipeline, with 5.1 GW of capacity currently under construction, providing clear multi-year visibility. This is expected to scale its installed capacity to 6 GW by FY28 and further to 8 GW by FY30E, implying a healthy CAGR of around 26% over FY25–30E. Importantly, a majority of these projects have been awarded by central agencies such as Solar Energy Corporation of India, NTPC Limited, NHPC Limited and SJVN Limited, which significantly reduces counterparty risk.
Robust project visibility – The company also enjoys strong execution visibility, with power purchase agreements (PPAs) already secured for 3.5 GW of its under-construction portfolio. Management expects letters of award for the remaining 1.6 GW, with only 300 MW pending, to translate into firm PPAs over the coming quarters. Additionally, evacuation infrastructure is in place for the entire 4.5 GW under-construction capacity, and most of the required land for projects planned up to FY27 has already been acquired, mitigating risks related to delays and internal rate of return (IRR).
FDRE dominates portfolio – A key highlight of the portfolio is the increasing share of FDRE (Firm and Dispatchable Renewable Energy) projects, which account for around 79% or 4.0 GW of the under-construction pipeline, although these are yet to be operational. These assets typically operate at plant load factors exceeding 40% and deliver returns on equity of about 18%. As the share of FDRE projects rises through FY26-28E, the company’s consolidated return ratios are expected to improve meaningfully, with RoCE and RoE projected to reach 11.0% and 19.5% respectively by FY28E, up from 8.8% and 7.1% in FY25.Impressive PAT growth prospects – Driven by this capacity expansion, ACME’s installed base is expected to grow from 2.5 GW in FY25 to 6 GW by FY28, supporting robust financial growth. Revenue, EBITDA and PAT are projected to grow at CAGRs of 62%, 63% and 69% respectively over FY25–28E, reaching Rs 5,900 crore, Rs 5,300 crore and Rs 1,200 crore. EBITDA margins are also likely to improve to 89.5% by FY28E from 87.9% in FY25, led by a higher contribution from high-margin FDRE projects.
Investec values the company at 9x FY28E EV/EBITDA. This is at a discount to peers such as JSW Energy, Tata Power and NTPC Green Energy, which are trading in the 12–14x range. Despite the relatively lower valuation, the brokerage believes ACME’s superior return ratios and margin profile, supported by its integrated business model, higher share of FDRE projects and strong project pipeline, offer strong earnings visibility.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)