ACME Solar Holdings Ltd, a prominent player in India’s renewable energy sector, launched its Initial Public Offering (IPO) on November 6, 2024. The IPO, which will close on November 8, 2024, offers shares in a price band of ₹275 to ₹289 per share. The company has raised ₹1,300.5 crore from anchor investors ahead of its public debut. The total IPO size is ₹2,900 crore, with ₹2,395 crore in fresh issue shares and ₹505 crore worth of shares being offered for sale (OFS) by its promoter, ACME Cleantech Solutions Private Ltd.
The IPO has been strategically structured to allocate 75% of shares to Qualified Institutional Buyers (QIBs), 15% to Non-Institutional Investors (NIIs), and 10% to retail investors. Additionally, shares worth up to ₹10 crore have been reserved for employees.
On the first day of bidding, by 1:48 PM, the retail portion was subscribed 88%, while the overall IPO was 27% subscribed, with 1.56 crore shares bid against the 5.82 crore shares available. The Non-Institutional Investor (NII) segment had received 9% subscription, and the QIB segment stood at 15%. The employee quota was 45% subscribed.
The Grey Market Premium (GMP) for ACME Solar shares is currently ₹10, implying a listing price of ₹299 per share, which is about 3.46% higher than the upper end of the IPO price band. However, analysts caution that the GMP has fluctuated recently, indicating a more modest investor enthusiasm compared to previous peaks.
ACME Solar, based in Gurugram, focuses on developing, constructing, owning, and maintaining large-scale solar projects. It leverages its in-house engineering, procurement, and construction (EPC) capabilities, as well as operations and maintenance (O&M) services, to offer cost-effective clean energy solutions. The company has a solid customer base, including government-backed entities, which ensures stable revenue through long-term power purchase agreements.
As of June 2024, ACME Solar operates 28 active projects, with 18 located in Andhra Pradesh, Rajasthan, and Telangana, accounting for 85% of its total operational capacity. The company showed a 1.88% year-on-year revenue growth in FY24, reaching ₹1,319.25 crore compared to ₹1,294.90 crore in the previous fiscal year. Notably, ACME Solar turned profitable in FY24, reporting a profit of ₹698.23 crore after a loss in FY23.
ACME Solar faces competition from listed companies such as Adani Green Energy Ltd, which has a P/E ratio of 291.7x, and ReNew Energy Global PLC, with a P/E of 48.8x. While the company’s financial multiples are not yet available, industry analysts view ACME Solar as a promising competitor in India’s renewable energy market.
The proceeds from the IPO will primarily be used to repay or prepay outstanding loans at the subsidiary level, as well as cover general corporate expenses. The company’s capital-intensive nature, coupled with its reliance on debt financing for expansion, makes it crucial for ACME Solar to strengthen its balance sheet. Analysts are cautiously optimistic about the company’s long-term prospects, noting that the GMP reflects moderate enthusiasm, which may suggest a more conservative outlook for its market debut.
Despite these challenges, ACME Solar’s integrated approach to renewable energy project development, combined with its growing portfolio and strong positioning in India’s clean energy sector, provides a solid foundation for future growth.
Disclaimer: The information provided in this update is for informational purposes only and should not be considered financial or investment advice. Investors are advised to conduct their own research or consult a professional advisor before making any investment decisions. Past performance is not indicative of future results.
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