Buy ACME Solar Holdings Ltd For Target Rs. 270 By JM Financial Services
4QFY25: Sunshine beats the street; maintain BUY
ACME in 4QFY25 reported revenue of INR 4.9bn (65% YoY, 40% QoQ, 9% JMFe). EBITDA came in at INR 4.4bn (2.2x YoY, 42% QoQ, 10% JMFe) with slight improvement in margin to 89% vs. 88% in 3QFY25. Adj. PAT came in at INR 1.4bn vs. loss of INR1.6bn in 4QFY24 and profit of INR1.1bn in 3QFY25 driven by 55%YoY higher generation. Given the company’s discernible execution performance and visibility on upcoming capacity (6,970MW by FY28E), we estimate revenue and EBITDA to grow at a CAGR of 54%/57% over FY25-28E. We maintain BUY on the stock with a TP of INR 270 valuing at an EV/EBITDA of14x on FY27E.
* Financial Performance: FY25 Revenue stood at INR 14bn (+7%YoY) due to phased commissioning of 1200 MW solar project. EBITDA margin increased to 89% in 4QFY25 vs. 68% in 4QFY24. EBITDA came at INR 2.7bn vs. loss of INR 556mn in FY24. Similarly, Adj. PAT was INR 1.9bn vs. Adj. loss of INR 2 bn in FY24. EPC business of company has reported Revenue of INR 13.5bn (2.8x YoY). The asset base of the company has increased to INR 155bn as on Mar’25 vs. INR114bn as on Mar’24 (75% Gross block/ 25% CWIP) whereas Net Debt has increased from INR 67bn as on Mar’24 to INR 75bn as on Mar’25.
* Operational capacity: Company’s operational capacity has increased to 2705 MW in May’25 from 1340 MW in Mar’24 backed by the commissioning of 1200 MW SECI ISTS project and part commissioning of 300 MW Sikar solar project. Operational portfolio is backed by long term PPAs with central/ state off takers constituting 67%/33%. Current operational portfolio of company constitutes only vanilla solar projects.
* Under construction and pipeline: Company’s under-construction capacity stands at 4,265 MW, comprising 3,380 MW of hybrid and FDRE projects, 735 MW of solar and, 150 MW of wind power projects. 450MW (300MW/ 150MW of Solar/Wind) projects are in advanced stages of construction and are expected to commission in FY26. Further, it targets to add 1.9GW capacity in FY27. Out of total under construction portfolio PPA has been signed for 51% capacity (2,175 MW). Tariff adopted/order is reserved for 3,865 MW of under construction capacity (4,265 MW). During the year, company also won 1,900 MW of projects (1000 MW FDRE, 600 MW Solar, 300 MW Hybrid) resulting in total portfolio of 6,970 MW.
* Financing Update: Company has debt tied up for INR 165bn needed for 1700 MW under construction projects. INR 7,700 Cr of debt for operational projects is refinanced at an average interest rate of c.8.8% p.a., which would result in c.75 bps debt cost reduction. Company’s balance sheet is strengthened due to equity raise with NW of INR 45bn vs. 26bn in FY24 improving Net debt to equity ratio to 1.9x in FY25 from 2.9x in FY24.
* Operational Highlights: Generation has increased to 4013 MUs (55.2% YoY) due to improvement in CUF (25.6%/ 23.6% in FY25/FY24) and commissioning of 1.2GW capacity in FY25. Plant availability too improved to 99.5% in FY25 vs. 99.4% in FY24. Grid availability factor stood at 99.8% in FY25 vs. 99.4 % in FY24.
* EPS Change: EPS has been revised downwards, -16% in FY27 due to re-computation of the tax based on FY25 results.
* Other Highlights: - 1900 MW projects (1000 MW FDRE, 600 MW Solar, 300 MW Hybrid) won during the year.
- 1890 MW of PPAs signed during the year.
- Grid connectivity in place for entire portfolio.
- Balance capacity of 300 MW Sikar solar project is expected to commission in next 30 days.
- Company is in final stages for signing three PPAs for combined capacity of 750 MW
- Battery capex is much below than company’s budget. All the battery suppliers of company are from China.
- Company focusing more on aggressive execution than aggressive bidding.
- Utilities prefer solar with battery projects instead of vanilla solar projects.
- Group has won 600MW PSP with 6 hrs storage project in Uttar Pradesh. It is currently under discussion with state and CEA for approval of DPR (Detailed Project Report).
- At Consolidated level, Operational Revenue is reflected only from Sale of Electricity while EPC Revenue gets eliminated due to inter-group nature.
- At Standalone level, the financials represent the EPC Revenue for performing EPC for its wholly owned subsidiaries.
- Credit rating upgraded to CRISIL A+/ Positive.
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SEBI Registration Number is INM000010361
