Buy ACME Solar Holdings Ltd for the Target Rs. 363 by Antique Stock Broking Limited
Powering India’s Dispatchable Clean Energy Future
ACME Solar is India's leading developer of firm and dispatchable renewable energy (FDRE), commanding the country's largest contracted pipeline at 4,031 MW, of which 2,980 MW (74%) has already been converted into long-term PPAs with high-quality central government-backed off-takers. The company is poised to more than double its operational capacity from 2,540 MW in FY25 to 6,270 MW by FY28E, delivering a robust Revenue/EBITDA/PAT CAGR of 71%/70%/77%, underpinned by a decisive shift in earnings quality from vanilla solar to higher-CUF, higher-tariff FDRE assets. With a fully integrated in-house EPC platform across solar and wind, plus a differentiated merchant BESS strategy, ACME offers superior growth visibility, execution credibility, and high-return optionality. We initiate coverage with a BUY rating and a target price of INR 363
Capacity to scale 2.5x to 6,270 MW, driving 70% EBITDA CAGR with rising unit economics
ACME's operational capacity is set for a step-change growing from 2,540 MW in FY25 to 6,270 MW by FY28E as FDRE projects progressively commissions. We expect a revenue/ EBITDA/PAT CAGR of 71%/70%/77% respectively as the mix shift toward higher-tariff, higherCUF FDRE driving EBITDA per MW from INR 6.4 mn currently to INR 13.4 mn by FY30E with FDRE contributing 57% of consolidated EBITDA by FY28E rising to 70% by FY30E from zero today. The earnings trajectory is further supported by improving DSO declining from 100 days in FY25 to 50 days FY28E
Largest FDRE pipeline at 4,031 MW with 74% PPA conversion and equity IRRs of 16–25%
ACME holds the largest FDRE contracted pipeline at 4,031 MW, spanning Assured Peak, PeakOnly, and RTC formats, with 2,980 MW already converted into firm PPAs with governmentbacked counterparties (SECI, NHPC). Project-level equity IRRs are compelling with 25% for Assured Peak (tariff INR 4.64/kWh, cost INR 117 mn/MW), 20% for Peak-Only, and 16% for RTC. These returns have structural upside from post-commissioning debt refinancing and battery cost deflation, every USD 10/kWh decline in BESS costs adds 150–300 bps to equity IRRs.
Standalone BESS and merchant power optionality add a differentiated earnings lever
Beyond FDRE, ACME has opened a distinct BESS growth vertical through two channels. First, a 275 MW / 550 MWh standalone BESS project under NHPC (equity IRR ~16%) establishes credentials in the 80 GW grid-scale storage market India targets by 2036E. Second and more differentiated is ACME's accelerated BESS commissioning strategy ahead of full FDRE CoD at existing solar sites, unlocking merchant power revenue (INR 2-9/kWh peak-off-peak spreads) that our estimates suggest can lift FY27E EBITDA by 11%. This strategy monetises storage assets during the construction phase, effectively front-loading returns and de-risking the project IRR.
In-house EPC and dual solar-wind capability create a structural cost and execution moat
ACME is one of the India’s leading RE developers with demonstrated capabilities in both solar and wind project development which is a critical differentiator for hybrid/FDRE projects requiring co-located multi-technology assets. Its fully integrated EPC arm has delivered over 5.4 GW of cumulative installations, consistently achieving project costs 8–12% below industry benchmarks. The Assured Peak project is being executed at INR 117 mn/MW versus a peer average of INR 130–140 mn/MW for comparable configurations. This cost advantage directly enhances project-level equity IRRs and provides a structural bidding edge in competitive FDRE tenders where tariff competitiveness determines award outcomes
Investment Summary
We value ACME at 10.5x FY28E EV/EBITDA, arriving at a target price of INR 363. This multiple is backed by a DCF valuation (Ke 13%, terminal growth 5%) and translates into an implied 3x FY28E P/BV, which appropriately reflects the sharp improvement in return profile (FY28E at 23% ROE) as high-CUF, high-tariff FDRE assets scale. At current levels, the stock trades at a discount to renewable peers despite superior 70%/77% EBITDA/PAT CAGR and the largest FDRE pipeline in India. We initiate coverage with a BUY rating.
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