Renewable energy giant ACME Solar Holdings Ltd is set to launch its IPO, opens on Nov 6

• ACME Solar IPO: Key Risks, Financial Performance, and Future Prospects
• Renewable Giant ACME Solar Targets ₹2,900 Crore through IPO Amid Competitive Project Bids and Financial Turnaround

BILKULONLINE

Ahmedabad, Nov 5: Renewable energy giant ACME Solar Holdings Ltd is set to launch its IPO, aiming to raise approximately ₹2,900 crore through a combination of a fresh issue of ₹2,395 crore and an Offer for Sale (OFS) of up to ₹505 crore.

The IPO will be open for subscription from November 6 to November 8, with a price band of ₹275-₹289 per share. IPO Details and Structure The IPO will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on November 13, 2024. The allotment date is set for November 11. ACME Solar has set a minimum market lot of 51 shares, requiring an investment of ₹14,739 for retail investors, who may apply for up to 13 lots.

ACME Solar, incorporated in 2008, ranks among India’s top 10 renewable energy companies and has commissioned a total of 3,668 MWp of solar power across 12 states. The company currently has 1,320 MW of operational solar capacity, with an additional 1,650 MW in contracted capacity and 2,380 MW of projects under construction, spanning solar, hybrid, and firm dispatchable renewable energy (FDRE) projects.

Financial Overview and Performance ACME Solar has shown a substantial turnaround in its financials in the fiscal year (FY) 2023-24, reporting a profit of ₹689.26 crore on a revenue of ₹1,466 crore, up from a net loss of ₹3.15 crore with revenue of ₹1,361 crore in FY 2022-23. For Q1 FY25, the company posted a modest profit of ₹1.39 crore on revenue of ₹340 crore, mainly bolstered by other income and exceptional items.

Despite this growth, the company’s profit margins remain thin. Its profit-after-tax (PAT) margin for FY24 was 47.59%, with previous years showing minimal or negative margins, highlighting ongoing operational challenges.

Risks and Concerns Analysts caution potential investors about several key risks tied to ACME Solar’s business model:

Concentrated Revenue: 63.22% of the company’s revenue is concentrated in three states — Andhra Pradesh, Rajasthan, and Telangana — creating potential revenue volatility tied to regional policies and demand.

Reliance on Government Infrastructure: ACME Solar’s projects heavily depend on government-owned transmission grids, posing a risk if infrastructure access or costs change.

Highly Competitive Bidding Environment: ACME’s growth relies on securing projects through competitive bidding, where price wars may pressure margins further.

Leadership and Strategic Goals ACME Solar’s leadership, including Founder & Chairman Manoj Upadhyay and CEO Nikhil Dhingra, emphasize the company’s commitment to providing sustainable energy at affordable rates.

 The IPO’s primary objectives include debt repayment and general corporate purposes, reflecting a strategic effort to strengthen the company’s balance sheet and sustain growth amid India’s push for green energy.

IPO Investment Perspective Backed by lead managers such as ICICI Securities, Kotak Mahindra Capital, and Motilal Oswal Investment Advisors, the ACME Solar IPO offers a long-term investment opportunity, particularly appealing to investors looking to capitalize on India’s renewable energy market expansion. However, prospective investors should weigh the IPO’s potential gains against operational and market risks.

Manoj Upadhyay, Founder & Chairman, Ankit Verma, EVP & Head Corporate Finance, Nikhil Dhingra CEO, Purshottam Kejriwal, CFO with Rahul Nandwani of Kotak  Mahindra Capital company were in Ahmedabad on Tuesday to interact with the media to provide details of the company’s  IPO.

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