Kotak initiates coverage on ACME Solar with buy rating, foresees 52% upside
Kotak Institutional Equities on Thursday said it has initiated coverage on renewable power player ACME Solar Holdings with a ‘buy’ rating at a target price of Rs 320 per share, which implies a potential upside of over 52% from the stock’s current levels. ACME Solar shares closed 10% higher on Thursday at Rs 210.80 on the BSE.
The brokerage highlighted ACME's aggressive expansion in India's renewable energy sector and its exceptional growth potential, supported by an increasing focus on hybrid and firm dispatchable renewable energy (FDRE) projects.
ACME, a key player in India's renewable power space, currently operates 2.5 GW of capacity, with an additional 4.4 GW under various stages of implementation. The company’s revenue is projected to grow at a compound annual growth rate (CAGR) of 52% between FY2024 and FY2028, driven by fresh project commissioning.
By FY2028, ACME is expected to generate Rs 7,000 crore in revenue, with EBITDA reaching Rs 6,200 crore — representing a 55% CAGR. The brokerage said it also expects ACME’s return on gross capital invested (CRoGCI) to remain healthy at 14-15%, aided by in-house execution capabilities and the superior return profile of hybrid projects.
Despite its superior growth trajectory, ACME trades at 7.6X EV/EBITDA on FY2028 estimates, at a discount to industry peers that command multiples between 8X and 15X EV/EBITDA, the brokerage said. Kotak noted that ACME’s valuation remains undemanding, given its strong earnings visibility and robust pipeline.
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