ACME Solar shares: Elara Capital sees 27.5% upside; gives 'stock to buy' tag

New Delhi, July 8, 2025 — In a fresh endorsement of India's renewable energy push, Elara Capital has initiated coverage on ACME Solar Holdings Ltd, labeling it a 'Stock to Buy' with a target price suggesting a 27.5% upside from its current trading levels. The brokerage firm cites ACME's robust project pipeline, proven execution capabilities, and alignment with India’s green energy goals as key growth drivers for the company.

Strong Fundamentals Back Optimism

ACME Solar, one of India's leading independent solar power producers, currently boasts an operational capacity of over 2.4 GW and has an additional 4.5 GW under development, including international projects in Oman and India. Elara Capital’s bullish stance is driven by the company’s solid fundamentals and strategic expansion plans, particularly in green hydrogen and ammonia.

“ACME Solar presents a compelling case of long-term value creation,” said Arpit Shah, Energy Analyst at Elara Capital. “Its backward integration, EPC capabilities, and exposure to international energy transition projects give it a multi-fold growth potential.”

Shah emphasized that ACME’s foray into green hydrogen production in Oman, which is among the world’s largest planned facilities, places it at the forefront of the clean energy revolution.

Financial Strength and Operational Efficiency

According to Elara’s research note, ACME Solar has improved operational efficiencies over the past two fiscal years. The company reported a revenue CAGR of 18% between FY21 and FY24, with EBIDTA margins stabilizing near 78% in FY24, a significant achievement in the cost-intensive renewable energy sector.

The brokerage expects earnings to grow at a CAGR of 22% over the next three years, supported by the commissioning of new solar assets and monetization of existing projects.

“With a visible revenue pipeline from long-term Power Purchase Agreements (PPAs) and government policy tailwinds, ACME’s cash flow stability is robust,” noted Shah.

Market Context: Renewable Energy in Focus

India's renewable energy sector is seeing aggressive investments and government support as it targets 500 GW of non-fossil fuel capacity by 2030. ACME Solar is among the frontrunners in this movement, with a strong track record in bidding and executing large-scale solar projects across Rajasthan, Gujarat, and Karnataka.

The company also benefits from favorable central and state government incentives under schemes like PM-KUSUM, PLI for solar modules, and Green Hydrogen Mission.

“The current geopolitical climate and rising oil import bills are pushing India further toward renewable self-reliance. Companies like ACME Solar are likely to be at the center of this energy transition,” said Dr. Rachita Sinha, Renewable Energy Expert at TERI.

Stock Performance and Valuation

As of July 8, ACME Solar’s stock was trading at ₹64.80 on the BSE, up nearly 9% over the past month, reflecting renewed investor interest in clean energy plays.

Elara Capital’s target price is set at ₹82.70, implying a 27.5% upside potential from current levels. The brokerage values the stock at 10.5x FY26E EV/EBITDA, which it considers fair given ACME’s earnings visibility and asset portfolio quality.

Risks and Challenges

Despite the optimism, Elara Capital warns investors of certain risks. These include:

• Execution delays in large-scale projects due to logistical or regulatory hurdles

• Currency fluctuation risks due to international project exposure

• Tariff volatility, especially in the competitive bidding landscape

• Debt management, given the capital-intensive nature of the industry

However, the firm noted that ACME has consistently demonstrated financial discipline and project execution capabilities, which helps mitigate many of these concerns.

Investor Outlook: Long-Term Value Play

For long-term investors looking to align their portfolios with the ESG and clean energy transition themes, ACME Solar presents an attractive entry point. Its strong order book, diversified project pipeline, and early mover advantage in green hydrogen position it well to benefit from the evolving energy landscape.

“The renewable space is no longer a niche—it’s the new growth frontier,” said Nilesh Patel, Portfolio Manager at GreenCap Funds. “ACME Solar, with its multi-GW pipeline and international vision, fits into the broader narrative of India’s energy independence.”

ACME Solar is poised for a promising trajectory amid India’s clean energy boom. With Elara Capital’s endorsement and a visible 27.5% price appreciation potential, the stock may find favor among institutional and retail investors alike who are betting on sustainable growth stories.