ACME Solar shares up over 20% YTD. HSBC, Motilal Oswal see further upside; here's why

ACME Solar Holdings shares have seen a healthy upside this year so far. The power stock has gained about 21% year-to-date (YTD) even as stock market sentiment has been weak due to the Middle East conflict, crude oil price hike, foreign capital outflow, and the rupee's fall to record low levels.

However, the stock has seen some profit booking lately. On a monthly scale, the stock is down 5% so far in May after clocking gains for the last three consecutive months.

On Tuesday, 12 May, the ACME Solar share price declined more than 1% in intraday trade. Is the ongoing correction in the stock price an opportunity to buy?

HSBC, Motilal Oswal say buy

ACME Solar's Q4 numbers were largely on expected lines. Its Q4FY26 PAT rose by 12.93% year-on-year to ₹139.32 crore, while total income at ₹ ₹547.85 crore saw a healthy jump of 12.52% YoY. Operating profit increased by 15.95% to ₹370.38 crore, while operating margin climbed by 3.04% to 67.61%.

Global brokerage firm HSBC has a buy call on the stock. In a report on 8 May, the global brokerage firm increased the target price of the stock to ₹370 from ₹350.

"We believe ACME Solar is in a high-growth phase, adding significant capacity over the next two years. Strategically, the business is evolving from a pure-play solar provider to a more complex firm and dispatchable renewable energy (FDRE) projects, which require a combination of solar, wind, and battery storage capacity," said HSBC.

"It is using a strategy of early BESS commissioning to generate merchant revenue before the BESS is integrated into their FDRE projects. All these positions are well to benefit from India’s RE growth story," HSBC said.

The brokerage firm has tweaked its estimates to account for a more aggressive BESS strategy, which is driving EBITDA and net debt increases.

"Our EPS estimates increased by 8-9% for FY27/FY28, and we introduced FY29 estimates. We value ACME on FY28 run-rate EBITDA, which is based on already-signed 25-year PPAs expected to be executed by the end of FY28. We assign a 10 times EBITDA multiple, which reflects growth. Adjusting for net debt as of March 2028, we derive an equity value of ₹27,500 crore," HSBC said.

Domestic brokerage firm Motilal Oswal Financial Services, too, has a buy call on the stock with a target price of ₹410.

"We have incorporated the merchant BESS capacity additions for FY27/FY28, resulting in a 6%/4% increase in our EBITDA estimates. We value the stock at 10 times FY28E EBITDA, leading to a target price of ₹410," Motilal said.

Motilal said the pace of commissioning against FY27 guidance of 1.5GW RE capacity addition, the progress of targeted 10GWh BESS capacity by end-FY27, and merchant spreads from BESS and their contribution to earnings in FY27 are the key monitorables for the stock.

While the stock appears to be a long-term buy, some technical experts suggest investors should wait for some more correction before initiating fresh long positions.

"ACME Solar has already witnessed a stellar rally over the last 2–3 months; hence, fresh long positions should be avoided at current levels," said Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers.

Patel highlighted that the stock is now showing signs of exhaustion near higher levels, which also aligns with the yearly pivot resistance zone. Moreover, RSI has formed a bearish divergence, indicating weakening momentum in the ongoing up move.

On the downside, Patel said ₹275 will act as immediate support, while ₹306 remains the immediate resistance level.

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Disclaimer: This story 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.