India’s Renewable Powerhouse With a Power Bill Problem
📌 At a Glance
ACME Solar is one of India’s largest renewable IPPs with a 2.8 GW+ operational portfolio across solar, wind, hybrid, and energy storage. It boasts ultra-high OPMs and 25-year PPAs but also sits on ₹10,976 Cr of debt. Despite impressive EBITDA margins (~88%), the bottom line often looks like a voltage dip. Is it a clean energy multibagger or just expensive hype?
1. 🔋 The Business Model – Solar, Wind & Storage Buffet
ACME is not your basic rooftop solar player. It’s a full-stack B2B infrastructure company with:
- 💡 Solar Projects: Pan-India, utility-scale, fixed tariff-based
- 💨 Wind & Hybrid: Strategic diversification beyond solar
- ⚡ FDRE (Firm & Dispatchable Renewable Energy): Includes battery & hydro storage to deliver power on demand
- 🔧 EPC + O&M: In-house teams keep costs low, uptime high
🎯 25-year PPAs = predictable revenue
📍 Spread across 10 Indian states
🛠️ Strong backward integration (engineering to maintenance)
2. 🔢 Financials – Margins So High, Even FMCG Is Jealous
| ₹ in Cr | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue | 1,692 | 1,488 | 1,295 | 1,319 | 1,405 |
| EBITDA | 1,553 | 1,240 | 1,173 | 1,089 | 1,235 |
| EBITDA Margin % | 92% | 83% | 91% | 83% | 88% |
| Net Profit | 15 | 62 | -3 | 698 | 251 |
| ROCE (%) | — | 7% | 7% | 8% | 8% |
| ROE (%) | — | — | — | 8% | 7.5% |
| EPS (₹) | 1.46 | 5.94 | -0.30 | 66.85 | 4.17 |
😮 Net profit in FY24 included ₹896 Cr of other income (asset sales or one-offs).
Without that? FY25 paints a more realistic ₹251 Cr PAT.
3. 🧱 Balance Sheet – Big Assets, Bigger Debt
| 🧾 Metrics | FY25 |
|---|---|
| Total Assets | ₹18,404 Cr |
| Fixed Assets | ₹12,315 Cr |
| Borrowings (Gross) | ₹10,976 Cr |
| Equity Capital | ₹121 Cr |
| Reserves | ₹4,390 Cr |
💣 Debt-to-equity: ~2.2x
That’s high, even for infra.
🔋 Reason: Capital-intensive nature of RE + storage-based power supply
📉 Interest cost FY25 = ₹759 Cr
That’s 54% of operating profit – this drains the system faster than a dead inverter.
4. ⚖️ Valuation – PE of 57 for a Utility?
Let’s put this in context:
| Company | P/E | ROCE | FY25 PAT (₹ Cr) | Market Cap (₹ Cr) |
|---|---|---|---|---|
| NTPC | 13.7 | 10.7% | 7,897 | ₹3.2 Lakh Cr |
| JSW Energy | 45.2 | 6.8% | 415 | ₹88,000 Cr |
| Adani Green | 94.5 | 8.7% | 383 | ₹1.57 Lakh Cr |
| ACME Solar | 57.5 | 8.4% | 251 | ₹15,317 Cr |
🔍 Book value = ₹74.5 → P/B = 3.4x
⚠️ That’s higher than NTPC (1.8x) and NHPC (1.2x)
5. 💰 Fair Value Range (FV 🔍)
Let’s value ACME using both earnings and asset multiples.
Method 1: PE-based
- Assign sustainable PE of 30x (mid-range for RE infra)
- Normalized PAT (FY25): ₹250 Cr
- Fair M-Cap: ₹7,500 Cr
→ With 60.2 Cr shares:
👉 FV Range: ₹120–₹130
Method 2: EV/EBITDA
- Assign 8x EV/EBITDA (in line with JSW, NHPC infra)
- EBITDA FY25: ₹1,235 Cr → EV = ₹9,880 Cr
- Subtract Net Debt (~₹9,976 Cr)
- Equity Value = near-zero (Yes, math is cruel)
👉 Even under this, equity appears overvalued at current ₹15,000+ Cr m-cap
6. 🚨 Red Flags & Risks
- ⚠️ 10,000+ Cr debt = huge refinancing risk
- ⚠️ Overreliance on other income in key profit years
- ⚠️ Cash flow mismatch — capex outflow > operating cash
- ⚠️ PE of 57 = already pricing in “green” perfection
- ⚠️ Sector dependent on policy support, tariffs, and DISCOM payment behavior
7. 🎯 TL;DR – ACME Solar Recap
- ☀️ One of India’s top RE infra players, operational scale ✅
- 📈 EBITDA margins elite, but profits not consistent
- 💣 Huge debt burden, high interest cost
- 💸 Trading at rich valuation vs peers like JSW Energy & NTPC
- 📉 FV = ₹120–₹130, CMP = ₹254 → way ahead of fundamentals
ACME is charging on solar, but investors may be overcharged already. 💡
🔖 Tags:
ACME Solar Holdings, Renewable Energy Stocks, Indian IPP, Green Energy, Solar IPO India, ACME Solar Fair Value, Infra Stocks India, Clean Tech, Solar Power India, Energy Storage Companies
✍️ Written by Prashant | 📅 June 18, 2025
