ACME Solar Holdings’ share price jumped as much as 5% in intraday trade on the BSE on Tuesday, 15 September, looking set to extend gains for the second consecutive session despite weak stock market sentiment.
ACME Solar Holdings’ share price opened at ₹402.95 against its previous close of ₹401.85 and jumped 4.8% to an intraday high of ₹421. The fresh buying in the stock was seen after global financial firm HSBC maintained a buy recommendation on the stock and raised the target price to ₹450 from ₹390.
The stock has surged 74% year-to-date, according to BSE data. It hit a 52-week high of ₹430.40 on 4 September after hitting a 52-week low of ₹195.65 on 27 January.
Why is HSBC bullish on ACME Solar?
In its report on 15 September, available on public platforms, HSBC said it “believes ACME is in a high growth phase, adding significant capacity over the next two years.”
According to the global financial firm, ACME’s business is evolving from a pure-play solar provider to more complex FDRE (firm and dispatchable renewable energy) projects, which require a combination of solar, wind, and BESS (battery energy storage systems).
Further, it is using a strategy of early BESS commissioning to generate merchant revenue. All these positions are well-suited to benefit from India’s renewable energy growth story.
HSBC has raised its EV/EBITDA multiple to incorporate a pickup in sector momentum, which may translate into a stronger growth pipeline for ACME beyond FY28.
“We assign an 11.7 times EBITDA multiple (10.9 times earlier for core business), adjust for net debt and discount the equity value to Sep’26 to arrive at a target price of ₹450. We maintain a buy rating as we expect the company to witness rapid growth over the next couple of years,” said HSBC.
However, high leverage from projects financed at an 80-20 debt-to-equity ratio, rising equipment and borrowing costs, and a delay in commissioning of contracted capacity are the key downside risks for the stock, according to HSBC.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
