ACME Solar Holdings shares surge 8% after this business update; can they rise further?

ACME Solar Holdings share price surged 8% in morning trade on the BSE on Friday, March 27, looking set to extend its winning run for the third consecutive session. ACME Solar Holdings shares opened at ₹253.45 against their previous close of ₹253.85 and jumped 8% to an intraday high of ₹274.35.

Over the last three sessions, the stock has jumped more than 15%, while on a monthly scale, it has gained more than 16%, extending gains for the second consecutive month. Year-to-date, the stock has gained 14% compared to a 13% fall in the equity benchmark Sensex.

Why is ACME Solar Holdings share price rising?

The stock is witnessing strong buying interest following the recent business updates shared by the company.

On March 24, the company said its wholly owned subsidiary ACME Surya Power Private Limited had commissioned the second phase of 35.714 MW/160.48 MWh out of the 250 MW/1,103.392 MWh capacity of the battery energy storage system (BESS) project located at Bikaner, Rajasthan.

Earlier on March 13, the company had announced that through its various subsidiaries, it had commissioned 142.67 MW/481.49 MWh of battery energy storage system (BESS) in phase-1 out of its total planned BESS capacity of 585 MW/2011.24 MWh under these SPVs in Rajasthan.

Subsequently, on March 26, the company said that its subsidiary ACME Eco Clean Energy Private Limited had commissioned an additional 4 MW out of the 100 MW wind power project at Surendaranagar, Gujarat.

Can the stock rise further?

Experts believe the stock is poised for a healthy upside in the long term due to the company's growth prospects.

According to Investec, ACME Solar is 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.

The global financial firm highlighted that "ACME’s 5.1GW under construction pipeline gives it a multi-year growth visibility, scaling installed capacity to 6GW by FY28 and 8GW by FY30E (implying a healthy 26% CAGR over FY25-30E). Most projects are awarded by central nodal agencies such as SECI, NTPC, NHPC, and SJVN, ensuring low counterparty risk."

Investec believes ACME’s installed capacity could rise to 6GW by FY28 from 2.5GW in FY25, driving revenue, EBITDA, and PAT growth at 62%, 63%, and 69% CAGR to ₹59 billion, ₹53billion, and ₹12 billion, respectively, while EBITDA margins may expand to 89.5% by FY28E versus 87.9% in FY25 on higher execution of high-margin FDRE projects.

Investec has initiated coverage on the stock with a buy rating, pegging the target price at ₹319, valuing it at 9 times FY28E EV/EBITDA.

Domestic brokerage firm Centrum Broking has also initiated a buy rating on the stock with a target price of ₹315.

Centrum highlighted that ACME Solar is emerging as a fast-growing renewable IPP (independent power producer) with a diversified portfolio.

"Its demonstrated execution capability across large utility-scale projects positions it well to participate in India’s accelerating renewable capacity additions. It aims to have 10GW of generational capacity and 20GWH of BESS by 2030," Centrum highlighted.

Centrum expects ACME's revenue, EBITDA, and PAT to grow by 60%, 61%, and 76% CAGR, respectively, over FY25-28E.

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